Countless businesses have benefitted from opportunities afforded by loans through the US Small Business Administration (SBA). This article looks at what you need to know about SBA loans and how to go about applying for one.

Basics on SBA Loans

Despite their name, SBA loans are not loans directly from the SBA. Instead, the SBA acts as a liaison between lenders and businesses to find good matches. Additionally, the SBA partially guarantees the loan, acting as protection for lenders and making it easier for borrowers to obtain funding. The SBA can back up to 85% of the loan, substantially lowering the risk for lenders. Aside from those services, the administration also “sets guidelines for loans made by its partnering lenders, community development organizations, and micro-lending institutions,” per their website.

Applying for an SBA Loan

Though the SBA does make the process of receiving a loan easier, businesses must still do some work to make it happen. The SBA lists some up-front eligibility requirements, which are:

• The borrower must be a for-profit business that operates in the US. 

• The business owner must have “invested their own time and money into the business.” 

• The business must have exhausted other financing options.  

The SBA also has a checklist for materials a business needs before approaching a lender. Those materials include a business plan, a description of the amount requested, the loan’s purpose, your business’s credit history, financial projections for the business, a description of possible collateral, and a description of industry experience (if applicable).

Once those materials are in order, a business owner can use the SBA’s Lender Match service to find a lender. To learn more about the Lender Match program, you can email or visit its website.

If you’d like to find out more about other business topics, be sure to check out the rest of Black Wolf Capital Group’s blog posts.