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January 9, 2023

What to know before qualifying for an SBA 7(a) loan

Applying and qualifying for an SBA 7(a) loan is easier if you have the proper direction. Here are a few guidelines to keep in mind as you begin the process. 

Must be a for-profit business located in the United States 

The business you want to get a loan for must be officially registered as a for-profit operation in the United States. Check this list [link] to make sure your industry is eligible. 

Collateral requirements 

Some lenders require collateral to secure a loan. You may need to offer personal property or assets, including real estate, inventory, and equipment if the lender needs to liquidate your property if you can’t repay your loan. On the other hand, Fund-Ex Solutions Group looks at cash flow when considering business acquisitions to avoid requiring collateral. Our team looks closely at your business so we can find ways to make sure we can help you. 

Exhausting all other financing options

Another requirement before successfully qualifying for an SBA 7(a) loan is to have exhausted all other potential funding sources. Moreover, you’ll need to show that you’ve also used some of your own money for financing. 

SBA 7(a) business size standards 

Business size standards should be kept in mind when applying for an SBA 7(a) loan. Depending on your industry, your business can range anywhere from 100 to 1500 employees. Furthermore, there’s a revenue range your business will need to fall into, but that’s dependent on the industry. Companies are classified as small if their net worth does not exceed $15 million or $5 million in annual net income.   

Lender-specific criteria 

You’ll need to meet specific criteria, depending on your lender. They can look at personal backgrounds, length of time in business (a minimum of at least one year), credit reports, business plans, financial statements, business and personal tax returns, and legal documents.   

Experts here to help 

Applying for an SBA 7(a) loan can feel daunting, but there are better options to navigate the process. At Fund-Ex Solutions Group, we have decades of experience helping businesses secure SBA 7(a) funding. We’re here to help make the process easy and more transparent, so you know exactly where you stand. Learn more at our website, and get in touch if you’re ready to start financing your small business today.