Question 1

What can I use an SBA loan for?

Accepted Answer

An SBA loan will need to be used for owner operated business for the acquisition of real estate, equipment, inventory, working capital, debt consolidation, partnership buy-out, business acquisition, ground up construction, tenant improvements to name a few.

Question 2

Is an SBA Loan a Grant?

Accepted Answer

No, an SBA loan is not a Grant and repayment is required. A Grant is seen as something that does not need to be paid back.

Question 3

Can I pay off my SBA loan early?

Accepted Answer

Yes you can pay your SBA loan off early, but you should be prepared to possibly pay a prepayment penalty in some cases.

Question 4

Can I have more than one SBA loan?

Accepted Answer

Yes you can have multiple SBA loans.

Question 5

Can an SBA loan be used for a non-profit?

Accepted Answer

No, the SBA programs are used for profit businesses.

Question 6

Will my tax returns be verified by the lender?

Accepted Answer

Yes, the lender will obtain transcripts from the IRS to verify the tax returns provided.

Question 7

Does an SBA loan take a long time to get funded.

Accepted Answer

The process can take some time. There are several factors that could cause a delay(s). Some advice: Do not fight the process or the needs from your lender. Be organized and detail oriented. Ask your lender to set expectations up front. This process could take 30 days up to 6 months depending on your request. Each request is unique.

Question 8

Can I get an SBA loan if I have had a bankruptcy?

Accepted Answer

Yes, a bankruptcy that is remote in time usually 10 years in the past is fine for most lenders.

Question 9

Will the lender take my home as secondary collateral?

Accepted Answer

Yes due to the Standard Operating Procedures (SOP) set forth by the SBA. These guidelines must be followed to protect the SBA Guarantee in the event of default. For example, if there is goodwill or intangible assets and secondary collateral is available then yes.  In some cases that lender will take secondary collateral due to internal lending requirements above what the SBA requires.

Question 10

How do I choose a lender?

Accepted Answer

Talk honestly with the lender, make sure you let them know exactly what you are trying to do and be sure that the lender can accommodate the request.  Even though the lender does SBA loans they may not do all the SBA supports.

Question 11

Can I get an SBA loan if I have a felony?

Accepted Answer

Yes you can get an SBA loan if you have a felony. A few things to consider is that the felony is remote in time and what the charges are that caused the felony. For example, a financial crime that leads to a felony would be hard to overcome in most cases.

Question 12

What does my FICO score need to be?

Accepted Answer

The FICO score for most lenders should be at least a 640 but some lenders do not have a minimum FICO score.

Question 13

If I hold a green card can I apply for an SBA loan?

Accepted Answer

Yes you can apply for an SBA loan with a green card. Be prepared to provide a copy of the front and back for the lender.

Question 14

Will my spouse need to be a guarantor on the loan request even if they do not have ownership?

Accepted Answer

The answer is no but the lender may require the spouse to be a guarantor. For example, the spouse has outside income in addition to the income being generated from the business.The spouse's income is needed to service the personal expenses in order to qualify for the SBA loan request.

Question 15

What is global cash flow?

Accepted Answer

The SBA lender will look first at the business to see if it will cash flow enough money to repay the SBA loan. Then the SBA lender will look at your personal expenses: mortgage, auto payments, student loans, credit card payments, basically anything showing up on our credit report. The SBA lender will also look for outside income like investment income, second job, spouses' income. Once the SBA lender finds these numbers, they do a global cash flow analysis. The global debt service coverage (DSC) will determine a DSC ratio. Usually, a 1.25% DSC is considered a doable SBA loan request.

Question 16

Will I personally have to be a guarantor on the SBA loan request?

Accepted Answer

Yes, the SBA loan is full recourse. You may not need to be a guarantor if you have under 20% ownership in some cases.

Question 17

What are some common reasons why my SBA loan could be declined?

Accepted Answer

Common reasons for decline ar poor credit, lack of post loan liquidity, no industry experience, lack of collateral, inadequate cash flow to name a few.

Question 18

Can I appeal a decline decision?

Accepted Answer

Yes, to get the best results you should first understand why the request was declined and look for mitigators. A good SBA Business Development Officer should be able to help guide you through the process with the lender.

FAQ