Can I get an SBA loan with no collateral?
Short answer
Yes, at smaller sizes. SBA requires no collateral on 7(a) Small, SBA Express, Export Express or CAPLines loans of $50,000 or less. Above that, a loan request must not be declined solely because collateral is inadequate. Source: SOP 50 10 8.1, App. 19.
Yes, at smaller sizes. SBA does not require collateralProperty a lender can take and sell if a loan is not repaid. on 7(a) Small, SBA Express, Export Express or CAPLines loans of $50,000 or less. The rule is in SOP 50 10 8.1, App. 19, Paras. B.2, B.3, B.5 and B.6. A lender may still take collateral under its own policy on a 7(a) Small loan of that size.
Above that line, collateral becomes part of the review, but a shortage alone is not fatal. Under App. 19, Para. A.1, a loan request must not be declined solely because collateral is inadequate. SBA says applicants may show repayment ability even when collateral would not repay the loan in full.
That rule has a limit. The same paragraph says the SBA guaranty is not a substitute for available collateral. If you hold assets that qualify, expect the lender to take them.
Three more points shape the answer:
- Cash flow comes first. The SOP calls cash flow the primary source of repayment. A loan without reasonable assurance of repayment from cash flow must be declined, whatever the collateral (Sec. B, Ch. 1, Para. C, p. 118).
- A guaranty is separate. Each loan must be guaranteed by at least one individual or entity, even with no collateral (Sec. A, Ch. 5, Para. A, p. 93).
- International Trade loans differ. The statute requires a first lien on the assets financed or other assets of the applicant (App. 19, Para. B.8).
Lender policies vary above the no-collateral line, so two lenders can ask for different assets on the same request.
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