For a new business or an existing business looking to buy an existing one, the lender wants to see an investment of $1 (cash or business assets) for each $3 borrowed. For an existing business, the lender wants to see a maximum of $4 of debt to $1 of net worth.

For a more detailed look at specific loan terms and rates, see our SBA 7(a) loan fact sheet.

Most lenders will expect you to identify two sources of repayment in case you can't repay the loan. The first source of collateral is typically profits from the business, and the second could be real estate, equipment, or some other type of capital you own. Generally, a lender prefers that you offer something like equipment, real estate, or other high-value assets which they could sell, if needed.

Sources:

• www.sba7a.loans/sba-7a-loans-small-business-blog/qualifying-for-an-sba-7a-loan
• www.sba7a.loans/eligibility-and-qualifications-for-the-sba-7a-loan

The advantages of an SBA 7(a) loan include:

• Highly competitive, low interest rates
• Long loan terms, up to 25 years
• Fixed and variable-rate options are available
• A variety of businesses are eligible
• Low down payments, typically around 10-20%
• Variety of loan options, including SBA 7(a) express loans, SBA 7(a) CAPLines
• Most SBA loans, including 7(a) loans are fully amortizing, meaning borrowers don’t have to worry about balloon payments

The eligibility requirements for an SBA 7(a) loan include:

• The business must meet the SBA's size standards for its particular industry.
• The business must have fewer than 500 employees and less than $7.5 million in revenue each year for the previous three years.
• The business must physically be based in the U.S. and operate within the U.S. and its territories.
• The business must operate for profit.
• Business owners must first have used other sources of financing, including personal funds, in order to qualify.
• Businesses must not be involved in lending, real estate, or speculation.
• Your business must operate for profit. Nonprofits and not-for-profit businesses are not eligible.
• You must also have some equity in the business — this could mean you already have a profitable business, or you could use your own personal equity as collateral.
• If you have any alternative financial resources, you must have used them first. For example, if you have a personal savings account or are able to get a personal loan, then you must first pursue those options before applying for an SBA 7(a) loan.
• The business owner cannot be on parole.
• You must be doing business in the U.S. or its territories.

The length of time it takes to get approved for an SBA 7(a) loan depends on the type of loan processing used. Standard 7(a) loan processing takes between 7-10 business days, while Certified Lenders Program (CLP) processing takes only 3 business days.

For more information, please see the following sources:

• How Long Does it Take to Approve an SBA 7(a) Loan?
• How to Fill Out Paperwork for the SBA 7(a) Loan