How To Apply For An SBA Loan: A Complete Guide

Step 4: Find An SBA Partner Lender

The next step in the SBA loan process is to find an SBA lender, also known as an intermediary.

SBA loans do not come directly from the SBA to the borrower. Instead, these government-backed loans are provided through approved lenders, including banks, credit unions, private lenders, CDCs, and nonprofits. Because the SBA guarantees at least 50% of loan proceeds (and in most cases, 85%), lenders are more willing to provide these loans to qualified small businesses.

This doesn’t mean that you can walk into any bank and receive an SBA loan. You have to find an SBA lender partner that services your area. Here’s how you can get started:

• Check to see if your financial institution offers SBA loans
• Get a referral from your financial institution for local SBA intermediaries
• Use the SBA’s Lender Match service
• Apply through online brokers, matching services, and marketplaces like SmartBiz or Lendio

Step 5: Put Together An SBA Loan Application

Once you’ve found an SBA-approved lender, it’s time to dive into the actual application process. This process can be a little intimidating, but it doesn’t have to be difficult, provided you know what to expect going in. The most important thing is to make sure you come prepared with the proper documentation.

Here’s the personal information you’ll need to gather for your SBA loan application:

• SBA borrower information forms for every partner, director, managing member, or owner of the company
• Signed personal guarantees for all owners with at least a 20% stake in the company
• Resumes for all owners with at least a 20% stake in the company
• Personal financial statements.

You’ll also need business documentation, including:

• Income statements
• Balance sheets
• Federal income tax returns for the last three years
• One-year cash flow projection
• Articles of Organization
• Business licenses
• Information pertaining to judgments and lawsuits
• Information pertaining to affiliated and subsidiary businesses

If collateral is required for your loan, you’ll need the following:

• Real estate appraisals
• Lease agreements
• Environmental reports

Before meeting with the lender, you can inquire about any additional documentation that is needed so that it can all be compiled prior to filling out the application.

Step 6: Complete & Submit Your SBA Loan Application

Once you’ve gathered all documentation and have completed your application, you will submit the complete loan package to your lender. It’s important to ensure that you include all information and documentation to prevent delays in the loan application process.

After submission, your lender will review your package to determine if your application is complete. The lender will also determine whether to approve the loan.

If your loan application is complete and the lender approves the loan, your documentation will be sent to the SBA.

Step 7: Wait For SBA Loan Approval

Once the application has been submitted for your SBA loan, the next step is to wait for your approval. Depending on the loan you’ve applied for, SBA loan approval can take several weeks, although some options — like SBA Express loans — will be approved within 36 hours.

During this time, you should communicate with your lender and make yourself available for any additional follow-up questions. More documentation may be required by the lender, so make sure that you deliver this in a timely manner to avoid delays in the application process. Typically, you should expect the entire process, from application to funding, to take 30 to 90 days.

Thankfully, checking your SBA loan status after you’ve applied is a fairly straightforward process.

How To Apply For An SBA 504 Loan

The SBA 504 loan process is a bit different than the standard SBA loan process. More documentation is required for these loans. This includes but is not limited to:

• Estimates, quotes, and costs from vendors and contractors
• Independent appraisals for real estate purchases
• A letter of intent from the lender
• A reason why the lender will not finance the entire project
• Lien instruments and account transcripts for refinancing debt

How To Apply For An SBA Loan To Buy A Business

When SBA loan proceeds are used to purchase a business, the process does not differ much from what it would be when applying for any other loan. Credit reports and financial documentation will be required to determine eligibility. Additional requirements may include:

• Business, stock, and asset purchase agreements for real estate purchases
• Real estate purchase agreements
• Business plans
• Proof of industry experience

How To Apply For An SBA Loan For A Startup

Startup businesses — businesses that have been in operation for 2 years or less — may be eligible for certain SBA loans. The requirements for a startup business are a little different when applying for an SBA loan.

New businesses must be able to show that they will be successful and profitable in spite of a short operating history. Alternative documentation is used to qualify new businesses, including:

• Detailed business plans
• Cash flow analysis
• Financial projections for at least one year
• Proof of industry experience

How To Apply For An SBA Loan For A Franchise

SBA loans are available for franchises. In many cases, loans for a franchise are easier to obtain than for the purchase of other new businesses because the franchise has a proven business model.

The organization has its own SBA Franchise Directory. This directory has a listing of all brands that are eligible to receive financing from the SBA. All brands that meet the FTC definition of a franchise are included on the list.

Some franchises do not fit under the FTC’s definition of a franchise. In these cases, the SBA has the option to add brands to the directory if it meets other requirements.

SBA loans can be obtained to purchase a franchise. The same documentation for other SBA loans applies. In addition, agreements between the franchisor and franchisee will also need to be produced, as well as other documentation.

SBA Loan Application Process FAQs

The Bottom Line On Applying For An SBA Loan

SBA loans are a great option for small business owners, but the application process can be frustrating when you don’t know what to expect. Being prepared, gathering your documentation in advance, and knowing what to expect beforehand can help simplify the process and put you one step closer to getting the funding you need.

If you don’t meet the SBA loan requirements or your application is rejected, there are other options available for your business, including small business loans and business lines of credit. Make sure to do your research, compare rates and terms, and explore your options to find the best funding option for your small business.