SBA loans are available for small business owners needing help getting a conventional business loan. They have more relaxed requirements when it comes to repayment and eligibility. Business owners receive many benefits when working with the Small Business Administration. In addition to their funding, they receive counseling and valuable information on running a business successfully. There are eligibility requirements that are strictly adhered to:
- Poor Credit
Poor credit is one of the factors that the SBA will look closely at when determining your business’s eligibility. Poor credit can signal a variety of red flags, including non-payment of necessary expenses. It can also mean that your business is overextended financially and cannot handle more debt. Before you apply for an SBA loan, take a close look at your credit scores.
- No Collateral
Most business loans require some form of collateral or cash to secure a percentage of the loan amount. If your business has no assets to use, your application will be turned down due to a lack of financial security. Collateral can be cash, inventory, equipment, vehicles, or real estate owned outright with significant financial value.
- Won’t Apply Not Wanting to Use Your Assets
Another reason you may be denied is that you refuse to apply your existing assets as collateral. While there may be several good reasons for this, you may need help to obtain the money you need to keep your business operating efficiently. Like many other lenders, the SBA requires some assurance that they will receive something in return for approving your loan.
- Defaulted on a Government Loan
The SBA is a government-funded program. If you have defaulted on a government loan in the past, it will exclude you from being approved for an SBA loan. If you have a default on your record and think you may want to apply for an SBA loan, do what you can to clear the derogatory events off your credit report.
- Criminal Record
Individuals with a criminal record may not be eligible for an SBA loan. This The loan eligibility will depend on the type of crime committed and the severity of the charges. Before you apply for a loan, talk to one of the SBA counselors and see if anything would make you ineligible for funding. They will be able to go over the eligibility requirements and work with you to ensure your approval, if possible.
Succeeding with SBA Loans: A Blueprint for Eligibility Success
While SBA loans offer valuable support for struggling small businesses, certain hurdles may affect eligibility. Factors like poor credit, lack of collateral, reluctance to use assets, past government loan defaults, or a criminal record can pose challenges. It’s crucial to assess and address these issues before applying. Seeking guidance from SBA counselors or organizations like the Economic Development Collaborative (EDC) can prove beneficial. By understanding and meeting eligibility requirements, businesses increase their chances of accessing the much-needed funding and resources for successful operations. Take the necessary steps to enhance your financial standing and pave the way for business growth.
When you need funding for your business, an SBA loan can could be a viable option if you meet the eligibility requirements. Contact the agents at EDC (Economic Development Collaborative) to find out more about the eligibility requirements for applying for SBA loans and other types of business funding. We can help you get the help you need. Call 805.409.9159 to get started today!