How To Get An SBA Loan To Start A New Business

How To Get An SBA Loan To Start A New Business

How To Get An SBA Loan To Start A New Business

Starting a new business requires capital, and for many entrepreneurs, securing funding is a significant challenge. However, the Small Business Administration (SBA) offers loan programs specifically designed to help entrepreneurs finance their startups. If you’re considering starting a new business and need funding, here are the key steps to get an SBA loan:

Understand SBA Loan Programs

Learn about the different SBA loan programs that are available for startup financing. The SBA 7(a) loan, which offers funding for a variety of business purposes, is the most popular program. In addition, depending on your funding requirements and eligibility requirements, take into account additional programs like the SBA Microloan program or the SBA Community Advantage program.

Develop a Solid Business Plan

A comprehensive and well-structured business plan is crucial when applying for an SBA loan. Your business plan should include a detailed description of your business, market analysis, competitive landscape, marketing strategies, and financial projections. It should clearly outline how the loan funds will be utilized and how your business will generate revenue to repay the loan. A strong business plan demonstrates your commitment and increases your chances of loan approval.

Research SBA Loan Requirements

Thoroughly research the specific requirements for SBA loans, especially those related to startups. The SBA has specific criteria regarding business size, credit history, collateral, down payment, and use of loan proceeds. Understand the eligibility requirements and ensure your business meets them before proceeding with the loan application.

Prepare Financial Statements

SBA loans require comprehensive financial statements to assess your business’s financial health and repayment ability. These statements typically include your balance sheet, income statement, and cash flow statement. Ensure your financial statements are accurate, up-to-date, and prepared in accordance with generally accepted accounting principles (GAAP).

Review Your Personal and Business Credit

Lenders will evaluate your personal and business credit history when considering your loan application. Check your personal credit score and review your credit report for any discrepancies or issues. Aim for a strong credit score (typically above 680) to enhance your chances of loan approval. Additionally, establish and maintain a positive business credit history by making timely payments on existing credit accounts.

Gather Required Documentation

SBA loan applications require various supporting documents. Gather and organize these documents in advance to streamline the application process. Common documents include personal and business tax returns, financial statements, business licenses, permits, and legal agreements. The SBA lender will provide a detailed list of required documentation specific to your loan application.

Find an SBA Approved Lender

Banks, credit unions, and non-profit organizations are examples of approved lenders who administer SBA loans. Research and identify lenders that are experienced in SBA loans and have a good track record of working with startups. Engage in discussions with multiple lenders to compare their terms, interest rates, fees, and requirements.

Prepare a Loan Application Package

Assemble a comprehensive loan application package that includes all the required documentation, your business plan, financial statements, and any additional information requested by the lender. Ensure your application is complete, accurate, and well-organized to present a professional image to the lender.

Submit the Loan Application

Submit your loan application to the selected SBA-approved lender. Be prepared to provide any additional information or answer questions that may arise during the evaluation process. Keep track of your application’s progress and follow up with the lender as necessary.

Be Patient and Persistent

Obtaining an SBA loan for a startup business can be a time-consuming process. It requires patience and persistence. Be prepared for potential delays, requests for additional information, and a thorough evaluation of your application. Stay proactive and engaged throughout the loan application process. Follow up with the lender regularly to check the status of your application and address any concerns or questions they may have. Be prepared to provide any requested information promptly and demonstrate your commitment to your business’s success.

Securing an SBA loan to start a new business requires careful preparation, attention to detail, and perseverance. By understanding the loan programs, meeting the eligibility requirements, preparing a comprehensive loan application package, and maintaining effective communication with the lender, you can increase your chances of obtaining the funding necessary to turn your entrepreneurial vision into a reality. Stay proactive, be patient, and explore all available options to finance your startup journey.


Mark J. Kane is a successful entrepreneur spending the last 16 years lending money to business owners. Beginning his career as a psychologist, at the age of 23 he became the youngest Hospital Admin running a 100+ bed facility. He built two businesses to over 500 employees and a business from scratch to over $18M in revenue in 18 months before selling. This experience led him to begin Sunwise Capital.

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