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SBA Frequently Asked Questions

As a small business owner looking for growth, an SBA loan could be a great fit. Plus, as a Preferred SBA lender ranked #2 SBA Lender in Pittsburgh and #4 in Cleveland as of 2020, our SBA team is well-versed in helping business owners understand how to apply for an SBA loan, how SBA loans work and how to qualify for an SBA loan.

We’ve outlined some Frequently Asked Questions and as always invite you to connect with our SBA team to get started.

What is an SBA loan?

An SBA loan is a loan for small businesses that is partly guaranteed by the federal government through the Small Business Administration. The SBA doesn’t actually provide the loan – a lender who works with the SBA does, like First Commonwealth Bank. By partnering with the SBA, the lender is taking on less risk, because the SBA partially backs up the loan. That means that if you are unable to pay back your SBA loan, the SBA will cover the portion that they guaranteed. To learn more about what an SBA loan is, check out these FAQs from the SBA.

How do I get an SBA loan?

To find out how to get an SBA loan, you first start with a lender like First Commonwealth Bank. The lender will help you understand the SBA loan options best for your business, explain the application, and provide support throughout the entire process. Once you’ve chosen the type of SBA loan that you’d like to apply for, your lender will provide you a loan checklist from the SBA so you know everything that’s needed for your application submission. The eligibility of SBA loans differs by loan type and will be explained to you by your banker.

How does a business apply for an SBA loan?

To apply for an SBA loan as a business owner, you’ll work directly with a lender like First Commonwealth Bank. We’ll help you to understand what will be needed to apply for an SBA loan, like supporting documentation, your business plan, and your financial records.

How do SBA loans work?

When you apply for an SBA loan, you’re actually applying for a bank loan with the lender you’ve chosen. This means your payments are made to the lender, not the SBA, and the bank is responsible for closing the loan with you and dispersing the loan proceeds. The SBA’s role is to review your application to ensure you meet eligibility and credit standards. The SBA then guarantees a portion of the loan, which ultimately means less risk to the lender.

How many SBA loans can I have?

Relatively speaking, there is no limit to how many SBA loans a small business owner can apply for and ultimately take out, as long as you remain in the eligibility guidelines provided by the SBA and your lender.

What does SBA loan stand for?

SBA stands for the U.S. Small Business Administration, which was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns while preserving free enterprise and maintaining and strengthening the U.S. economy. The SBA has risen in awareness throughout COVID-19, as they became the primary vehicle for supporting small business with the Paycheck Protection Program.

How can I get an SBA loan with bad credit?

Just like in your personal finances, responsible lending opportunities may exist even if you have what is considered to be bad credit, but it depends on your unique financial situation. New business owners often need higher credit scores to qualify for an SBA loan compared to established businesses, and your lender may check your personal credit score, business credit score, or both. But don’t be discouraged – if your credit score is preventing you from applying now, our SBA lending team can provide you with resources for taking steps to repair your credit for future SBA loan applications.

Getting Started with the SBA

We would love to learn more about the needs of your business and determine if applying for an SBA loan is the best option for you. And if not, we have a full suite of business financing solutions to help position your business for growth.

Contact our SBA team today to learn more or schedule an appointment to find out additional ways we can support your business.