Getting a small business off the ground can feel like a daunting task. Loans from the SBA can be an essential part of the process. According to Zippia, the average SBA loan is in the amount of $417,316, while the maximum is estimated to be around $5 million. With these essential funds, potential small business owners can make their dreams of business ownership come true. Let’s look at a few things that you need to know about SBA loan approval in 2024.
How to Qualify
If you’re considering starting a small business, you’ll want to be in on the SBA loan approval process. To qualify for this helpful type of financial product, you’ll need to meet various SBA requirements such as a business that is physically located and operating in the U.S. or one of its territories. You must have been unable to obtain business financing from other more traditional sources. It’s also required that you have a credit score in the 600s at least. In most cases, you can’t have a criminal record, and you must not currently owe the federal government any money. Private collateral may also be required in some cases.
Who Should Apply?
Small business owners are often wondering when or if it’s a good idea to apply for an SBA loan. An SBA loan is generally a good idea in order to meet long-term rather than short-term business goals. This is usually helpful for entrepreneurs who have been unable to get approved for traditional lending products. If you want to avoid higher-interest options like credit cards, this can also be a good option. It’s also a good option for those who maybe don’t have an outstanding credit score.
What Are the Limitations?
These types of loans are not intended for non-profits. This type of loan is also not available to those outside of the United States. This type of loan is for those who have already invested their own time and money. If the lending institution sees that you haven’t invested your time or money, it could stop your approval. If you’ve already obtained financial assistance from traditional lenders, you likely won’t be able to use an SBA loan for additional funds.
This is just a basic overview of the SBA loan program. If you’d like to learn more about this option, please contact us today. We look forward to working with you.