Resources Other Advice Business Basics ABC's Home Page

REFERENCE CHANNELS

What We're Reading Resources Dear ABC's. . . . Venture Capital Directory SBA Funding Directory The Funny Pages Tradeshow Database ABC's Services Privacy Policy

ABC's Site Search


 

Who can get an SBA Loan?

<<Back to SBA Index

Most businesses are eligible for a SBA loan as long as they are based in the United States or one of its possessions. Most of the programs require that you have a reasonable amount of owners equity and that you invest your money, including personal assets, first. All owners of 20% or more of the business must also provide their personal guarantee of an SBA-backed loan. The SBA is moving to using credit scoring with a number of their programs and also to letting lenders set some of their own standards for a business. Considerations include:

  • Can the company can repay the loan from cash flow?
  • Does the owner have experience in the industry?
  • Does the owner have reasonably good credit?
  • Is the owner investing their own money?
  • What kind of collateral stands behind the loan?
  • Are the owners of good character?

If you do not have enough property to guarantee the loan, that will not by itself disqualify you from SBA loans.

The definition of a "small business" depends on what the industry looks like. The SBA has used the Standard Industrial Classification (SIC Codes) to define the biggest size of an eligible small business.

In general, these are the numbers to consider:

  • Retail and Service--Maximum size ranges between $3.5 and $13.5 million in sales
  • Construction -- $7.0 to $17.0 million in sales
  • Agriculture -- $500,000 to $3.5 million in sales
  • Wholesale – No more than 100 employees

A qualifying business must be independent both in ownership and operation from larger companies companies. It also cannot be the biggest company in its field of business.

If you are turned down for an SBA guaranteed loan, that does not mean you have reached the "end of the line." In many cases, you can get assistance in getting your own finances and those of the business ready to qualify for the loan. If you may have been turned down with bad information, the SBA does have several processes for appeal.

For more information about the industry your business is in, please check at http://www.sba.gov/regulations/siccodes/

<<Back to SBA Index

 
Do you have a friend or colleague who would enjoy this article?
Click here to suggest it!
Business BasicsOther AdviceResourcesSite MapABC's Home PageABC's Book Stop

 

| disclaimer | terms | privacy policy | site map | about us | contact us |
(c) Copyright The ABC's of Small Business (R) 1999 - 2003. All Rights Reserved (except where noted). Reprinting or copying any content is expressly prohibited unless permssion is granted by the owners. Site is edited & published by Anna Kris Bell of CrackerJack Advantage, owner and operator of ABC's of Small Business(R).
Site Hosted by Front Range Internet, Inc.