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Startup Business SBA Express Loans
Find out if your startup business qualifies for an SBA Express loan.
Every small business starts as an idea. When an entrepreneur devotes time and resources to build on the foundations of that idea, a business is born. Sadly, having the necessary resources to see a business idea through to completion is not a luxury that many startup business owners have.
If you lack the capital to fully bring your idea to life, then a Small Business Administration-backed loan is perfect for you. The SBA encourages independence in the third-party lenders that handle its loan products. This makes it easier for potential borrowers to find just the right lender to work with them in getting the loan they need.
But to get a loan for a young startup business, there are some general prerequisites (along with the standard SBA loan requirements) that lenders look for to evaluate the potential risk involved.
For example, one of the most important aspects of a startup that a lender scrutinizes is its financial history. Usually, lenders want to see two to three years' worth of bank statements and any other paperwork showing money being invested, as well as any profits earned for a startup business. Another crucial trait of a startup more likely to be approved for an SBA-backed loan is the ownership of any major tangible assets. If your startup is lacking in these two areas, then an SBA Express loan may not be the right loan product you need right now. This is not to say that there aren't other financing options available until your business meets the aforementioned criteria. SBA microloans, for example, are easy to approve and might be a great first step in building your startup.
Compare Startup Business Loan Options: Rates, Terms
SBA Loan Requirements for Startups
Startups have unique needs when it comes to financing, and the Small Business Administration (SBA) Express Loan Program is designed to meet those needs.
To qualify for an SBA Express Loan, startups must meet the following requirements:
- Operate for profit
- Engage in operations within the USA
- Show a need for financing
- Demonstrate the ability to repay the loan
- Have no delinquencies on previous debts to the government
- Use funds for sound business purposes
- Lending
- Life insurance
- Pyramid sale distribution plans
- Political interests and/or lobbying
- Teaching of religion
- Legal gambling activities
- Illegal activities
- Government-owned businesses
- Acts of a sexual nature
- Equity interest owned by the CDC or lender
What are some good SBA loan options for startups?
- SBA Express loans are a great option for startup businesses that lack the capital to fully bring their ideas to life. These loans are backed by the Small Business Administration and provide more independence to third-party lenders, leading to quicker turnaround times.Learn more →
What are the requirements for an SBA Express loan?
- The requirements for an SBA loan include being a for-profit business operating within the U.S., having a sound business plan, having financed the business through other means, and being able to demonstrate a need for the loan.Learn more →
Is it easy to get approved for an SBA Express loan?
- Generally, the approval process for an SBA Express loan is quick and straightforward. However, there are some general prerequisites that lenders look for to evaluate any potential risks. For example, one of the most important aspects of a startup that a lender scrutinizes is its financial history.Learn more →
In addition, startups must not be engaged in any of the following activities:
If a startup meets all of these requirements, they may be eligible for an SBA Express loan.
Top 3 Easy-to-Approve SBA Loans for Startups
Let's go through three SBA loans with relatively easy approval processes that can be utilized for your startup.
1. SBA Express Loans
As mentioned above, SBA Express loans can be a fantastic option for your startup. The biggest advantage this loan type has going for it is its incredibly fast approval timeline. You'll rarely need to wait more than three days to get a response, with funding provided about 20 days later.
This loan isn't for everyone, though. Note that it has an upper loan amount cap of $500,000. That means if you need more than this for your startup, this financing alone won't meet your needs.
2. SBA 7(a) Loans
SBA 7(a) loans are the largest financing option on the list, ranging up to $5 million. They also have can be used for a wide variety of startup expenses, from working capital to even acquiring a building you'll operate your business in. An SBA 7(a) loan can even refinance your existing debt.
The downside here is mostly related to timing. An SBA 7(a) loan's approval processes usually take a couple of weeks, with funds provided up to a month and a half later.
3. SBA Microloans
The SBA microloan program offers low levels of financing — up to $50,000 — for small businesses, including startups. While you can't use a microloan for purchasing real estate or paying off existing loans, they can fund your startup's working capital, machinery, supplies, and other equipment.
Lending decisions are made by designated, not-for-profit intermediaries, with funds coming directly from the Small Business Administration.