{"id":29531,"date":"2022-05-23T10:00:51","date_gmt":"2022-05-23T17:00:51","guid":{"rendered":"https:\/\/financer.com\/?post_type=wiki&p=29531"},"modified":"2024-03-26T08:25:57","modified_gmt":"2024-03-26T15:25:57","slug":"sba-loans","status":"publish","type":"wiki","link":"https:\/\/financer.com\/loans\/articles\/sba-loans\/","title":{"rendered":"Understanding SBA Loans"},"content":{"rendered":"\n

An SBA loan is a type of business financing that\u2019s backed by the U.S. Small Business Administration (SBA). The SBA was created in 1953 to help small businesses<\/a> grow, compete and create jobs in America. <\/p>\n\n\n\n

The agency provides many services to help entrepreneurs start and grow their companies\u2014including loans, grants and counseling services.<\/p>\n\n\n\n

Through its network of partner banks and other financial institutions, the SBA extends more than $100 billion every year in loan guarantees or direct lending to small businesses across all industries throughout the country.<\/p>\n\n\n\n

The SBA doesn\u2019t directly fund small businesses,<\/a> but instead provides low-cost financing to small businesses through partner banks, credit unions and other financial institutions.<\/p>\n\n\n\n

SBA loans are not direct loans from the SBA<\/strong>. They are guaranteed by the SBA and originated by partner banks or credit unions.<\/p>\n\n\n\n

SBA Loan Requirements<\/h2>\n\n\n
<\/div>

Businesses applying for an SBA loan must have been in operation for at least two years and have a credit score of 680 or higher.<\/p><\/div>\n\n\n

If you’ve found a lender that offers an SBA loan and your credit score is below 680, then it’s worth applying for a loan<\/a> as long as the business itself meets all requirements. You will still get some of the benefits of being backed by the Small Business Administration, even if you don’t have a stellar credit history.<\/p>\n\n\n\n

The SBA has some criteria for what constitutes “small” businesses, but it varies from industry to industry. <\/p>\n\n\n\n

For example, a small business<\/a> may be defined as having fewer than 500 employees or less than $7 million in annual revenue within two years of submitting an application. <\/p>\n\n\n\n

In other industries it could be smaller\u2014for example, with construction firms it might only be 20 employees or $2 million in annual revenue over two years; with restaurants and hotels it might be 50 employees or $5 million over two years; for manufacturing companies it could be 100 employees or $15 million within two years; etc.<\/p>\n\n\n\n

The specific requirements vary depending on the type of SBA loan you apply for, with 7(a) loans often having more relaxed criteria than 504 loans.<\/strong><\/p>\n\n\n\n

If you’re not sure which type of SBA loan is right for your business, see the differences between the types of SBA loans below.<\/p>\n\n\n\n

Need a traditional business loan? Compare business loans here<\/a>.<\/strong><\/p>\n\n\n\n

Types of SBA Loans<\/h2>\n\n\n\n

There are several basic types of SBA loans available, including:<\/p>\n\n\n\n