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Small Business Administration (SBA) Loan Requirements

SBA loan requirements vary by the type of loan that best suits your business. By working with a banker from our SBA team, we’ll get to know you and your business so that you fully understand the best type of SBA loan, how to qualify for an SBA loan, and what the loan requirements are.

While the nuts and bolts of SBA loan requirements vary between the loan types, like an SBA 7(a), SBA Express line-of-credit, or SBA Export loan, there are three basic requirements.

Three Basic SBA Loan Requirements

Are you positioned to repay the SBA loan?

The SBA lender will consider factors that contribute to the ability of your business to repay the SBA loan, which is part of the process to qualify. To help aid in this decision, the SBA will review your tax returns and financial statements for the last three years to look for patterns of financial stability. One of the benefits of working with an SBA-Preferred Lender like First Commonwealth is that our team will help you understand what documents you’ll need to provide as part of the SBA loan requirements, and walk you through any questions.

In addition, SBA loans are typically structured to target debt to earnings ratios of 1:1.25 or better.

Are you qualified for an SBA loan?

The SBA will also look at your business structure to ensure that you not only run the business, but also have a healthy debt-to-income ratio. Because it’s not in the best interest of the SBA, First Commonwealth or the business to offer loans that the business is not positioned to repay, understanding up-front the full scope of your financial stability is critical.

Is the Deal Structure Correct?

Time and again, we hear from our SBA customers that our team took the time to get to know them, their business and their plans. This is critical pre-work for when the SBA reviews the deal structure, which is an essential part of the SBA loan requirements and qualifications. They will review whether there are earn-outs or partial equity buy-outs, and that the buyer is able to put down at least 10%.

Getting Started with Your SBA Loan

While this is a basic overview of the requirements of an SBA loan, we’d love to learn more about the needs of your business and determine if the SBA is the best route 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.