SBA Requirements for a 7(a) Loan
- Your company must operate as a for-profit company.
- Business must be transacted in the United States or its possessions.
- Your company must meet SBA Size Standards.
- While the vast majority of businesses are eligible for financial assistance from the SBA, some are not. Check this list of Eligible and Ineligible Types of Businesses to see if your company qualifies.
- Loans must be used for an approved purpose. 7(a) loan proceeds may be used to establish a new business or to assist in the operation, acquisition or expansion of an existing business: Eligible and Ineligible Use of Proceeds.
- Your company must not have funds available from other sources. The SBA does not extend financial assistance to businesses when the financial strength of the individual owners or the company itself is sufficient to provide all or part of the financing.
- Both business and personal financial resources are reviewed as part of the eligibility criteria. If these resources are found to be excessive, your company will be required to use those resources in lieu of part or all of the requested loan proceeds.
- Your business must repay the loan on time from the projected operating cash flow of the business.
- Business owners must prove the have good character. The SBA will obtain a “Statement of Personal History” from the principals of each applicant firm to determine if they have historically shown the willingness and ability to pay their debts and whether they have abided by the laws of their community.
- Your company must have the management expertise and commitment necessary for success.
- Your business must have a feasible business plan.
See also 7 a Loan Program and How 7(a) Loans Work.
