How to Get an SBA Loan in 3 Steps

Here’s exactly how to get SBA loan funding for your business.
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The Complete Guide to Getting an SBA Loan

As with most affordable small business loans, figuring out how to get an SBA loan can be tricky for small businesses. Even while the SBA guarantee mitigates the risk that lenders take on by lending through SBA programs, SBA loans still have some pretty lofty requirements.

Luckily, there’s a three-step guide to how to get an SBA loan that can help you submit your best application possible:

  1. Determine your eligibility.
  2. Find the best SBA lender for your business.
  3. Gather all of the necessary documents together to apply.

In this guide, we’ll break down all the details on these three steps to getting an SBA loan. Here’s your ultimate resource on how to get one

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What’s the Small Business Administration?

As a small business owner, you’ve probably heard of the Small Business Administration before.

It’s the government agency that, put simply, strives to help businesses succeed by providing resources and funding.

But if you’re new to the process of finding business loans for your company, then you might not know what SBA loans are.

Before we dive deep into how to get an SBA loan, let’s look at the basics of how this kind of loan works.

What’s an SBA Loan?

When you hear the term SBA loan, it’s easy to think that this type of financing is literally a loan from the SBA.

However, that’s not the case,

SBA loans are loans from banks and traditional lenders, but partially guaranteed by the government.

So, if you approach a bank’s SBA lending program and end up getting approved, you’re getting a bank loan—with a hefty SBA guarantee behind it.

The SBA guarantees 75% to 85% of the value of the loan. This means that, in the worst case scenario, if you default on your loan, the lender is guaranteed to get 75% to 85% of the loan’s value—not including what they’ve already gotten in your earlier interest payments.

Lenders have a hard time making money on smaller loans, especially when the interest rates on those loans are low. The SBA guarantee incentivizes banks to give out loans to small businesses at lower rates.

By offering guarantees, the SBA makes bank loans much more accessible for small business owners who wouldn’t traditionally qualify for bank loans.

The SBA guarantees loans from three separate funding programs:the 7(a) loan program, the CDC/504 loan program, and the microloan program.

7(a) Loans

Loans from the SBA 7(a) program are the most common and popular type of SBA loan.

They provide up to $5 million in capital, at terms as long as 25 years, and rates around 7% to 8%.

7(a) loans are a suitable financing option for many different business purposes—real estate purchases, working capital needs, business expansion, and so on.

So when you’re wondering how to get an SBA loan, odds are, you’re wondering how to get a 7(a) SBA loan.

We’ll go into the other loan types offered by the SBA below, but because the 7(a) loan is the most common and general type of SBA financing, the rest of this guide will look specifically at this type of loan.

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CDC/504 Loans

The CDC/504 loan program is the SBA’s most specific financing program.

CDC/504 loans are exclusively used for major fixed asset purchases. This means big equipment purchases, and commercial real estate purchases.

These loans have a unique structure. The SBA provides 40% of the project’s costs, a participating lender provides 50%, and the borrower fronts 10%. In some circumstances, you (the borrower) may need to provide 20%.

Though there is no limit to the cost of the project, the SBA caps funding contributions at $5 million.


The SBA also offers a Microloan program for small or new businesses searching for loans under $50,000.

In this program, the SBA provides funds to intermediary lenders—nonprofit community-based organizations with experience in lending and business management—that determine the businesses eligible for microloans.

These loans can be used for working capital, machinery or equipment, inventory or supplies, and more. They cannot be used to pay off existing debts or for real estate.

How to Get an SBA Loan: Follow These Steps

Wondering how to get an SBA loan from start to finish?

Well, it’s a long process that can be a little more manageable when you break it down into easy-to-accomplish steps.

Here’s exactly how to get funds for your business.

Step 1: Determine Your SBA Loan Eligibility

The first step in getting an SBA loan is qualifying.

SBA funding is the gold standard of small business financing, and as such it can be tough to qualify for. Even though the SBA is working on improving the accessibility of its program, it’s still the case that only the most eligible business owners will qualify.

So before you set out to get one, you should be confident you’re eligible for one.

The SBA loan application process is a long one, after all, so you don’t want to waste time on a financing option that’s out of reach for your business.

Here are the minimum requirements you should be able to meet to get an SBA loan.

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Personal FICO score

Having at least a 620 credit score is a minimum SBA loan requirement, but a 680+ credit score will make you much more eligible.

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Time in Business

At least two years in business is preferable, but startups can get 7(a) SBA loans as well. Startups have a much harder time qualifying for one—they’ll have to fulfill all the loan requirements and have business management and industry experience.

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Annual Revenue

While the SBA doesn’t set a specific annual revenue requirement, most the banks working in the SBA lending program will want to see a $100,000 minimum for annual revenue.

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Not all SBA loans are collateralized, or need to be collateralized up to the full value of the loan. But if you’re able to bring personal or business assets as collateral to the table, you’ll have an easier time qualifying.

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Down Payment

If you’re using the loan to buy another business, you’ll have to put at least a 10% down payment on the SBA financing. As such, you’ll need to prove that you have the cash assets to make this down payment.

For other purposes, the down payment requirements vary.

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Profitable businesses tend to have the best chances at qualifying for one. Specifically, the SBA generally requires two consecutive years of profitability.

However, some exceptions do apply such as when a dip in profitability occurs because of a large investment.

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Good Standing

To get an SBA loan, you can’t have any delinquencies or defaults on government debts in the past.

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Specific Requirements for the 7(a) Loan Program

While there are general requirements for SBA loans, there are specific requirements if you’re looking to get one from the 7(a) loan program.

In order to get one from the 7(a) loan program, you’ll need:


Be a small business defined by the SBA. This generally means that you need to have fewer than 500 employees, but it varies by your industry type. Be sure to check the official guidelines.

  • Be a for-profit business operating in the United States
  • Be in an eligible industry (most businesses, with very few exceptions, are).
  • Have invested in your business with your own personal assets before seeking an SBA 7(A) loan.
  • To prove that you create or retain jobs and meet public policy goals in line with the SBA goals.
  • Have a valid plan for the use of the SBA funds.

Step 2: Find the Best SBA Lender to Work With

Once you have the information above, the next step for how to get an SBA loan is to find the lender you want to work with.

As previously stated, the SBA is not the lender in this situation.

Instead, they guarantee loans made by traditional business lenders—namely, commercial banks, local banks, and credit unions.

You can find an SBA lender by going to your local bank, or the bank branch you use for your business. Most popular banks in the U.S. offer some form of SBA funding—like Chase, Wells Fargo, Capital One, etc. We also love Celtic Bank and First Home Bank.

You can also connect to an SBA lender via the SBA’s website, through their lender match tool.

Another common way to find an SBA loan is to use a broker to facilitate the search. This will likely cost your business a little more money than finding one on your own. However, it could take a lot of the pain points out of the search: they know exactly how to get an SBA loan.

Most of these SBA lenders that service and disburse business loans do not offer online funding programs, with the exception of SmartBiz.

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How to Pick the Best SBA Lender for You

Of course, you’ll want to work with an SBA lender that offers the specific SBA loan program you’re looking for. This shouldn’t be too hard as most banks with an SBA program have the 7(a) loan as their core offering.

But after that, it’s important to work with a lender who has experience working within the SBA program.

Lenders who regularly disburse SBA loans typically approve more applications, and know which borrowers will succeed, and which might not.

Lenders with strong track records in the SBA lending program are typically designated as “Preferred” lenders. These Preferred lenders have the privilege to process loan applications faster, based on the experience they have with SBA loans and the volume of applications they bring in. If you can, filter your search for preferred lenders only.

Once you are sure you’re working with a reputable SBA lender, and one that offers the program you need, does a high volume of loans, and is a Preferred lender, you can drill into the specifics.

Be sure to ask your SBA lender these questions to see if you’re working with the right partner:

  • What’s your average loan size, and average loan rates?
  • What’s the range of interest rates you approve borrowers for?
  • Is there a pre-approval process?
  • How long does the funding process take?
  • What collateral do you require to qualify?
  • Will I have a dedicated SBA loan specialist to guide me through the process?

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What’s SmartBiz?

SmartBiz isn’t technically an online SBA lender. They’re a marketplace that connects your application to other SBA lenders.

This means that you’re applying to SmartBiz, and you qualify, SmartBiz applies your application to the SBA lenders they’re connected to.

SmartBiz-partnered lenders use technology developed by SmartBiz to help them underwrite, making their own processes more automated through SmartBiz.

In the end, SmartBiz offers a much more streamlined application process to get an SBA loan: the combination of the marketplace and the underwriting software makes the process very efficient.

Step 3: Get Your SBA Loan Application Together

Once you’ve found the best SBA lender for your business, the next logical step is to get your SBA loan application together.

When it comes to getting an SBA loan—this is often the hardest step for busy small business owners.

As far as business loan applications go, this application is one of the most involved. The offer some of the longest terms, largest amounts, and lowest rates, so SBA lenders will be looking at a lot of information about your business to see if you qualify for this kind of financing.

What documentation will you need to submit?

Here’s the general list of the documents and paperwork you’ll need to provide:



  • SBA Borrower’s Information Forms
  • Driver’s License
  • Voided Business Check
  • Bank Statements
  • Balance Sheet
  • Profit & Loss Statements
  • Business Tax Returns
  • Personal Tax Returns
  • Business Plan
  • Business Debt Schedule
  • Business Lease
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How to Get an SBA Loan: Post-Application

You’ve gone through all the steps for how to get an SBA loan, and you’ve submitted your application.

Now what?

Well, you need to know that the application can take weeks—even up to months. You’ve submitted a lot of paperwork, which means they have a lot of paperwork to review.

After you submit, here’s the process you might face.

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Letter of Intent

However, once you’ve submitted an application, you can expect to hear back within one or two weeks whether the SBA and the SBA lender plans to move forward with your loan application. If they do want to move forward with your profile, they’ll likely send you a letter of intent explaining how much you’ve initially qualified for, and what your rates and terms are likely to be.

If the rates and terms are anywhere close to what you’d like to have in your financing agreement, you then return a signed copy of the letter of intent. Some lenders might also require a refundable deposit to move the loan underwriting.

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Formal underwriting for an SBA loan can take anywhere from 2 to 4 weeks.

During the underwriting process, your loan representative or loan officer might follow up with you a few times to clarify your financial documents, or even ask for you to provide more.

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Loan Agreement

If all went well with the underwriting process, the SBA lender will send you a loan agreement for you to commit to—outlining the terms, amount, and rates you actually qualified for.

Some lenders might also attach a deposit requirement to the commitment before moving the loan into final closing—typically quoted as a percentage of the SBA loan’s principal.

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Loan Closing

Loan closing is where you tie all loose ends on the loan agreement, and finalize the paperwork. This could take a short amount of time, or a while, depending on how complicated your loan is. Towards the end of the closing process, you’ll sign the agreement, pay the closing costs and SBA guarantee fees, and you’ll see the funds in your account.

How Hard Is it to Get an SBA Loan?

How hard is it to get one of these SBA loans, then? Although some of the SBA loan products are intended to make low-interest business loan products more accessible to small business owners than they otherwise would be, it won’t come as a surprise that you still have to meet strict requirements to be considered a good candidate for one.

Since every business owner dreams of getting an SBA loan, the SBA and their lending partners can be choosy about who they approve to receive a loan.

Clearly, that depends on how closely you meet the eligibility requirements. As you can see, being a good candidate for one means that you have solid cash flow and a strong credit history.

If these standards don’t match your current financial standing, expect to have a hard time obtaining an SBA loan.

How Hard Is It to Get an SBA Loan Compared to Other Loans?

When compared to other types of business loans, the SBA loan application process is commonly considered the most difficult. This is true not only because of the eligibility requirements but also because of the sheer length of the application and underwriting process.

Whereas many online alternative lenders can review your loan application and offer cash in hand within just a few days, the application process can take weeks or even months to complete before you ever learn whether you’re approved, let alone get direct access to the funds your business needs.

At the same time, obtaining one is also very difficult because the eligibility requirements set down by the SBA and their lending partners are extremely high.

What Might Make it Hard for You to Get a Business Loan

There are any number of reasons that a thriving business may struggle to figure out how to get an SBA loan. For example, if you’re a startup or young business, you have a poor credit score, or you’re not willing to offer collateral or a personal guarantee, you probably won’t qualify for an SBA loan.

Similarly, any blemishes on your personal or business financial history could hurt your qualifications. You also won’t qualify for an SBA loan if you’re not a for-profit business, you need funds for an unauthorized purpose, or if your business operates mostly outside the United States.

Depending on which aspect of your business or financial history has disqualified you for an SBA loan, time and focus on growing your business might improve your situation and eligibility for one. However, other disqualifying factors, such as being a for-profit business, won’t change with time. If you don’t meet those requirements, you’ll have a hard time qualifying for an SBA loan.

The Best Alternatives If You Can’t Get an SBA Loan

SBA loans are admittedly very hard to qualify for, and if you can’t get one in the end, there will still be options available to your business.

If you aren’t quite there yet for a one, you can use other desirable loan products to meet your financing needs while building your credit score and time in business—helping you qualify for a better loan (like an SBA loan) in the future.

So if you can’t get one just yet, here are two alternatives to consider.

Medium-Term Loans

medium-term loan is structured no differently than an SBA loan, but offered by a different type of lender.

Medium-term loans are slightly smaller than the maximum amount SBA loans offer, and typically come with shorter terms.

They’re also usually offered by online lenders, instead of banks. These lenders can work at a much faster pace than the SBA does, and typically work with less-qualified borrowers than the SBA would.

The accessibility and speed of medium-term loans give them a higher interest rate: somewhere between 7% and 20%.

Medium-term lenders like Funding CircleLending Club or Fundation could be good alternatives if you can’t get an SBA loan with a bank lender.

Business Lines of Credit

Another good alternative is a business line of credit.

Again, banks offer business lines of credit with large amounts and desirable rates—not unlike SBA loans.

However, online lenders like Lending Club and Fundation offer smaller lines of credit with similarly desirable rates.

Like medium-term loans, business lines of credit are easier to qualify for than SBA loans. These lenders will simply work with slightly less qualified borrowers. And because they fund more quickly and are generally more accessible, rates will be higher than SBA loans: between 8% and 30%.

A business line of credit is a great product to use for cash flow stability, and helps you build your credit as you draw and repay your credit line.

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