Make sure your business is eligible: Eligible small businesses must meet the SBA’s size standards, which are based on annual receipts or number of employees, depending on industry. The SBA also has four basic requirements that borrowers need to meet:
- Be a for-profit business.
- Be physically located and operating in the U.S.
- Have invested personal equity in the business.
- Have exhausted all other financing options (though you may qualify for an SBA loan if you have other business debt).
You also would likely need a personal credit score of at least 680 to have a higher chance of qualifying for an SBA loan.
Remember, you would be personally responsible for the debt: If your business defaults on an SBA loan, you would personally be on the hook to repay it if you own at least 20% of the business. And if you pledged any collateral, your lender could seize and liquidate those assets and apply the value to your remaining balance.
Seek assistance when you need it: If you need help navigating the application process and requirements, you can turn to a Small Business Development Center (SBDC) in your area. The national network of SBDCs operate in partnership with the SBA to provide no- or low-cost assistance to small business owners.