Small Business Loans: Eligibility and How to Apply
gput one Business loan can be complex as the loan process and rules require time and attention. Breaking it down into manageable steps — from understanding the requirements to finding lenders to knowing how to apply for a small business loan — can help you get the financing your business needs.
7(a) loans are the most basic and widely used type of loan in the Small Business Administration (SBA) business loan programs. Its name comes from Article 7(a) of the Small Business Actwhich authorizes the agency to provide loans to American small businesses.
They are designed to help for-profit businesses that are unable to secure additional funding from other sources.
Who is eligible for the 7(a) small business loan?
Eligibility requirements are based on business aspects, not owners. So, The SBA makes loans businesses and not individuals. All businesses being considered for financing under the SBA’s 7(a) loan program must:
- Meets SBA sizing standards
- Be for profit
- Not already having the internal resources (professional or personal) to provide the financing and being able to demonstrate repayment.
Some variants of SBA 7(a) Loan Program may also require additional eligibility criteria.
What is your credit rating?
You can get your credit report for free from each of the three major credit bureaus – Equifax, Experian and TransUnion. You can also get your credit score for free from several credit card issuers and personal finance websites, such as NerdWallet.
When to get a business loan from online lenders:
- You are out of warranty.
- You are running out of time in business.
- You need financing quickly.
Online lenders offer small business loans and lines of credit from around $1,000 to $5 million.
The loan terms for the 7(a) small business loan
The maximum loan term is 25 years for real estate and 7 years for working capital. The maximum loan amount is $2 million.