January 17, 2023 By Suzanne Robertson

If your business could benefit from outside funding, one good option may be a Small Business Administration (SBA) loan. Known for low rates and long terms, an SBA loan may provide valuable working capital, help refinance expensive debt, and can be used for real estate purchases or refinance.

Apply for an SBA Loan

The application process for an SBA loan can be complex. It’s typically a good idea to know where you stand before you apply. Here’s more information about SBA loans and what factors may impact your approval.

What is an SBA loan?

By far the Small Business Administration’s most popular loan program, SBA 7(a) loans have low rates and long terms, leading to small monthly payments. Proceeds from an SBA loan can typically be used in a wide variety of ways. Working capital and debt refinance are two popular uses of proceeds from an SBA loan. For detailed information about these loans, visit the SmartBiz website.

Benefits of SBA loans

Applying for an SBA loan is not always easy, but it typically has many benefits. For example, you may be able to get the working capital you need to operate effectively or you may be able to pay off existing high interest debt.

There may be other benefits to applying for an SBA loan. You’ll typically get a better interest rate than if you were to use credit cards or other sources of funding.

Credit scores and SBA loan approval

When applying for a loan, you will generally need to provide many details about your personal and financial situation. The lender will then assess whether they are willing to lend you money.

Lenders consider your credit history when deciding whether or not to grant you a loan. They may take into account your income, savings, debts and other assets that you have. This is because lenders want to know that if they lend you the money, it will be repaid in full with interest.

Generally speaking, 650 to 739 is a good credit score, 740 to 799 is very good, while above 800 is often considered an excellent credit score. To qualify for an SBA loan from a bank in the SmartBiz® network, the business owner's personal credit score must be above 650.

The causes of low credit scores can typically be broken down into three categories: 1) not paying off debt, 2) not having a good history of credit, and 3) not having enough available credit. SBA lenders will generally not lend to business owners who have poor credit scores.

 See if you pre-qualify

Businesses ineligible for an SBA loan

The Small Business Administration lists industries that are excluded from SBA funding programs. Excluded businesses include:

  • Gambling
  • Life insurance
  • Religious teaching
  • Primarily political and lobbying activities
  • Oil wildcatting
  • Mining
  • Mortgage servicing
  • Real estate development
  • Bail bond
  • Pawn or private clubs

For the detailed list of ineligible businesses, head to the SBA's website.

Additional requirements for an SBA loan

While the vast majority of businesses are eligible for financial assistance from the SBA, some are not. Eligible businesses must:

  • Operate for profit
  • Be engaged in, or propose to do business in, the U.S. or its territories
  • Have reasonable owner equity to invest
  • Use alternative financial resources, including personal assets, before seeking financial assistance

Next steps for business owners who want to apply for an SBA loan

SmartBiz has helped more small business owners secure SBA loans than any other platform. We’ve streamlined the long, complicated process of applying for funding. One single application is powered by intuitive technology and supported by an exceptional team. That means you save precious time during the application process. Check now whether you pre-qualify* for an SBA 7(a) loan.

If you’re interested in non-SBA financing, SmartBiz facilitates bank term loans, and other funding options like lines of credit.

Learn more about the popular SBA loan program on the SmartBiz blog here.

See if you pre-qualify