Who Qualifies for Small Business Administration Loans?

The Small Business Administration is not a lender, but gives a guarantee to a lender that it will give up to a certain percentage of the loan amount if a small business is unable to repay the loan. This guarantee for Small Business Administration loans can be key for a small business trying to get financing after being turned down for a loan. The Small Business Administration loans come in a variety of forms.

In order to qualify for Small Business Administration loans, the borrowers must be doing business in the United States and must have exhausted other means of getting money, including personal finances. After that, the Small Business Administration loans have other specific criteria.

  • Size - The Small Business Administration sets up guidelines for who qualifies for its loans based on number of employees or amount of annual sales.

  • Type of business - The Small Business Administration lists which for-profit businesses qualify for loans. Not-for-profits are not eligible.

  • Use of proceeds - The Small Business Administration loans can be used for a variety of purposes, including purchasing real estate, buying equipment and supplies, renovations and supplying seasonal lines of credit.
In addition to these specific requirements, applicants for Small Business Administration loans must also be able to show a plan for repayment as well as good financial practices. Part of the evaluation for Small Business Administration loans applications will include whether the applicant has paid past debts and whether the cash flow and management give reasonable proof the business can afford to pay back the loan. 

Visit http://sba.gov for more information about Small Business Administration loans.