SBA loan requirements fall into two buckets: rules about the business (set by the SBA) and what the lender wants to see (the ability to repay). Meet both and you are in good shape.
Business eligibility (the SBA’s rules)
- For-profit and U.S.-based. Nonprofits and businesses outside the United States do not qualify.
- Small under your size standard. You must be small for your industry, measured by average annual receipts or employees.
- An eligible type of business. Lending, gambling, speculation, and a handful of other categories are generally not eligible.
- Good character. Owners with certain criminal history or prior defaults on federal debt can be screened out.
Run the eligibility and program checker to test these in a minute.
Financial requirements (what the lender wants)
- Ability to repay. This is the big one. Lenders want to see cash flow that comfortably covers the new payment, usually a debt service coverage ratio around 1.15 to 1.25 or higher.
- Reasonable credit. No universal minimum, but many lenders look for a score in the mid-600s or better, and they look at your full credit history.
- An equity injection. Most loans expect some money in the deal, often around 10%, more for startups or 504 real estate.
- A sound use of funds. The money has to go toward an eligible purpose, like working capital, equipment, real estate, or buying a business.
Documents you will need
Expect to provide business and personal tax returns, financial statements, a business plan or clear use of funds, a business debt schedule, and formation documents. The how to apply guide walks through the full process.
Requirements vary by lender and follow the current SBA SOP, so treat this as a map, not a guarantee, and confirm specifics with a participating lender.