The Capital One SBA Loan: Everything You Need to Know and More

Updated on March 18, 2020
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There’s a very good reason that U.S. Small Business Administration loans are one of the most coveted business loans. With longer payback periods, higher borrowing limits, and lower interest rates, SBA loans are an ideal financing option for small businesses. And many major U.S. banks and finance institutions offer these. Among them is the popular Capital One SBA Loan.

But there’s no surprise, then, that since these SBA loans are so preferable, qualifying for them is notoriously difficult. Since only the most creditworthy businesses can qualify for SBA loans, how do you go about getting them?

And, specifically, how do you qualify for the Capital One SBA Loan? Let’s go through it here.

First: What Is an SBA Loan?

The most important part to understanding the Capital One SBA Loan is understanding the fundamentals of SBA loans themselves. Even if you know, it’s worth a review. So, the Small Business Administration does not administer loans itself. Again, the SBA is not itself a lender. Financing is still coming from a bank.

What makes this connected to the SBA specifically, however, is that the government entity acts as a guarantor for small businesses seeking financing. In other words, the SBA agrees to take on some of the risk of the loan by making itself responsible for up to 85% of the loan amount. That’s one of the reasons that only borrowers who are deemed very creditworthy are approved for this loan—the government doesn’t want to back anyone they expect to default.

That’s why SBA loans are commonly referred to as SBA-guaranteed loans. A lending institution—like a bank such as Capital One—will be more likely to approve your loan request if it is SBA-guaranteed, because it’s a lower risk for the lender.

Loans guaranteed by the SBA range from small to large amounts—between $500 and all the way up to $5.5 million—and can be used for almost any business purpose.

So, Then, What’s a Capital One SBA Loan?

It’s all in the name. In a Capital One SBA Loan, Capital One provides the loan and the SBA guarantees a portion of that loan. The actual financing will come from Capital One as the lender.

Capital One offers the most common SBA loan, a SBA 7(a) Loan. You can also get a Capital One SBA 504 Loan if you’re seeking fixed assets like real estate or equipment through a certified development company (CDC), a private, non-profit corporation that promotes economic development within local communities.

If you qualify for the Capital One SBA Loan, they’ll match you with the right loan for your business needs. And you can do this with the assurance that the SBA has deemed Capital One an SBA-preferred lender—this means that the SBA believes that Capital One is proficient in processing SBA-backed loans.

More on Each of Capital One’s SBA Loan Products

You can apply for a few different Capital One SBA Loans. Different programs are a fit for different types of small businesses. Here’s a spotlight on the two SBA loans that could be a fit for you:

Capital One SBA 7(a) Loan Program

These are, by far, the most common of SBA loans. The SBA 7(a) Loan program is meant to help out lots of different types of businesses in lots of different regions at lots of different stages in their lifecycles.

They can be used for so much—refinancing debt, as business construction loans, you-name-it—and because they’re delivered to you in a lump sum like traditional term loans, they allow for a lot of flexibility in how you can use them.

Capital One SBA 504 Loan Program

If you’re looking to get a hold of cash for fixed assets, you might be a fit for the Capital One SBA 504 Loan. These loans can be used for things like renovation, real estate, and equipment, and are secured when businesses work in conjunction with a CDC.

You can’t use SBA 504 Loans for working capital or inventory, or to repay other debt. However, if you’re thinking about expanding your company with new facilities, getting new equipment, modernizing your place, or even building a parking lot, an SBA 504 Loan could be right for you.

A note: Capital One may have other small business loan products available, but you’ll have to get in touch with one of their loan officers to get the full scoop.


Who’s Eligible for a Capital One SBA Loan?

As with the vast majority of small business loans, there’s no hard-and-fast rule for who’s eligible for a Capital One SBA Loan and who’s not. However, here are a few basic guidelines:

  • Your business must be for-profit.
  • Your business must be both based and operating in the United States.
  • Your business must be of a certain size and considered “small” for its industry—these requirements vary from industry to industry.
  • You must have invested some of your own money into the business.

Here’s the biggest one, though:

You have to be unable to secure traditional financing—financing without the SBA’s guarantee—in order to apply to have the SBA guarantee a portion of your loan.

If you can secure financing without the SBA’s help, there’s no need to apply for an SBA loan. However, if you’ve been denied financing by lending institutions and are looking for another place to turn, then the SBA should be the first place you look.

But remember: With SBA loans, you’ll have to qualify under SBA guidelines as well as guidelines from your chosen lender. More to come on that.

How to Apply for a Capital One SBA Loan

If you want to explore your options with Capital One, you should start by reaching out to them about your financing goals—either through their website, by phone, or at one of their many physical locations.

You’ll need have prepped documentation beforehand:

  • Loan request amount and detailed allocation of funds
  • Business plan
  • Business financials (profit and loss statement; balance sheet; projected financials for next 1-3 years; last 2 years’ worth of tax returns; business credit history)
  • Proof of ownership
  • Loan application history
  • Personal financials (personal financial statement; tax returns for last 2 years; credit history)
  • Owner résumés
  • Collateral offerings in case of default

Depending on the type of loan you want, there may be other requirements, too.

Is a Capital One SBA Loan Right for You?

As with any financing option, it really depends on your business’s financing needs and qualifications. But as with any SBA loan available, if you can qualify for SBA-guaranteed financing, there won’t be many better options available.

Alternatives to the Capital One SBA Loan

Just like Capital One, several lenders offer SBA-backed small business loan options for highly qualified borrowers. These also have those same great advantages as the Capital One SBA Loan—longer repayment terms, lower interest rates, and an opportunity to borrow up to $5.5 million.

If you’re a small business owner with a great track record in business and solid credit, and you think you’ll qualify for an SBA loan, that’s fantastic—you’re setting yourself up for one of the best options for financing available.

See which SBA loans you qualify for now, and check out all of your options!

Emily Kate Pope

Emily Pope is a writer and editor. She specializes in all things small business marketing and financing.
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