The requirements for an SBA loan vary depending on the type of loan you are applying for. For an SBA 7(a) loan, you must meet the eligibility requirements, have a good credit score (preferably above 680), have a history free from recent bankruptcies, foreclosures, or tax liens, have been in business for at least two years, have the ability to provide collateral for loan requests over $25,000, have the ability to make a down payment of 10% if your intended use of funds is to purchase a business, commercial real estate, or business-related equipment, have sufficient cash flow to meet your debt obligations, have sufficient working capital (once you subtract liabilities from assets), and have “good character” according to the SBA (partially decided based on your track record of managing your resources and day-to-day business affairs).

For an SBA 504 loan, the requirements for lenders are that they must meet minimum lending activity level requirements (actively lend to customers), have a board of directors with at least nine directors who vote, have full-time, professional management, have full-time, professional staff, be an SBA-approved private sector lender, and work with CDCs.

To apply for an SBA loan, you will need to provide the following documents:

• SBA Form 1919 (borrower information form)
• SBA Form 912 (statement of personal history)
• SBA Form 413 (personal financial statement)
• Financial statements, including a balance sheet, profit and loss, and income projection
• Agreement to purchase the business
• Letter of intent to buy the business
• Business tax returns for the past three years
• Any outstanding business debt
• Long-term business contracts
• Documentation of business assets
• Business lease agreement
• Incorporation documents and/or business license
• Business plan

The SBA will usually order an independent business appraisal to give lenders an idea of what the true value of the business is. The SBA allows applicants to get help (for example, from a lawyer or a translator) filling out the application paperwork, but your lender will be required to submit information about who gave you help to the SBA, so you’ll need to document who this person is as well.

The process for getting an SBA loan approved involves verifying eligibility, checking your credit, finding a lender or CDC, pre-qualifying, deciding on your purchase, and completing the application.

To verify eligibility, you must make sure that you meet the requirements for the program. These include not defaulting on student loans by a major owner within the business, no criminal history, not owning too many assets, and having good credit.

You must also check your credit, as the SBA has no credit requirements, but the lender you work with will.

You must then find a lender or CDC that offers 504 loans.

You should then get prequalified. To do this, the CDC will need three years of personal and business tax returns, interim financial documents, and a personal financial statement.

You must then decide on your purchase, and complete the application. This includes addressing your creditworthiness, business’s eligibility for the 504 loan program, and your business’s current level of indebtedness. The loan application can be downloaded from the SBA as a PDF file here.

The Small Business Administration (SBA) offers a variety of loan products that can be beneficial to small businesses. These loans typically range from $500 to $5.5 million and can be used for most business purposes, including operating capital and long-term fixed assets. Additionally, SBA loans are available to most small businesses with a few easy to remember requirements. For starters, any business seeking SBA financing must be a for-profit company, must be located in and conduct business in the United States, must have owner-invested equity, and must not be receiving funding from any other financial lender. As with any other business financing, business size, ability to repay, and the purpose of the business is also taken into consideration.

The advantages of an SBA loan include:

• The government will cover the loan if a borrower defaults, making banks more willing to offer these loan products to high-risk borrowers.
• The loan can be used to address cash flow problems, payroll, and commercial real estate expenses.
• The loan can be used for most business purposes, including operating capital and long-term fixed assets.
• The loan is available to most small businesses with a few easy to remember requirements.

SBA loan disadvantages include:

• Lengthy approval times (for standard SBA 7(a) loans)
• Lots of documentation
• Collateral is often required
• Certain businesses, including real estate investing, lending, gambling, and speculation are prohibited
• High credit scores are typically required (typically 680+)
• May be restrictions on supplemental/additional financing

Source: www.sba7a.loans/sba-7a-loans-small-business-blog/pros-and-cons

Source: www.commercialrealestate.loans/blog/difference-between-sba-7a-and-sba-504-in-cre