Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Aug 7, 2012

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Applying for Small Business Administration (SBA) loans can be an exciting though stressful time for prospective borrowers. Remembering the necessary paperwork and requirements in the application process can help avoid any early rejection and denial.

Each SBA loan program is unique and each has their own specific criteria for qualifying. Despite these differences, there are a few shared similarities.

Before applying for SBA loans, borrowers must remember that all borrowed money carries interest. It is foolhardy to borrow more money than is necessary to launch a business. Furthermore, borrowing more money than necessary can actually put borrowers at risk since the greater amount borrowed, the greater amount of interest will accrue and the greater amount of money will be owed back to the lender.

Borrowers must also keep in mind that the SBA, while a government agency, does not actually lend money. It merely guarantees business loans so that affiliated lenders have minimized risk when lending out money to promising entrepreneurs. So applications must be tailored for third-party lenders, not the government itself.

To find an SBA loan lender near you, apply for a loan using this form.

Requirement Checklist

Once a borrower has found a lender that cooperates with the SBA, then it is time to gather the necessary information for an SBA loan application.

There are ten items applicants must be ready to give:

  • Personal Information: Reviewing personal information is vital for lenders. This includes background information, such as current and former addresses, education, and even criminal record.
  • Resumes and Work Experience: Resumes are the next necessary requirement in borrowing SBA loans. This allows lenders to see that an applicant has the necessary experience to operate an enterprise.
  • A Business Plan: The next and perhaps most vital requirement is the business plan. No lender will give money to a borrower that lacks a well-written business plan. Learning how to write a business plan is necessary to demonstrate to a lender how and why a business will succeed. Without it, a lender will see almost no reason to lend money out.
  • Personal Credit Report: SBA loan lenders will seek the personal credit report of any and all borrowers. Obviously, borrowers will excellent credit will be viewed as favorable by lenders. In contrast, a poor credit history can be a red flag in the eye of a lender since borrowers who cannot manage their own credit are unlikely to manage a business’s credit. Getting a credit report before applying for SBA loans is a wise move that allows borrowers to analyze their own credit history and it gives applicant’s time to prepare explanations for any past credit problems visible on their report.
  • Business Credit Report: These are essentially the corporate version of an individual’s credit report. These credit reports are specifically for businesses and review a company’s borrowing history.
  • Income tax returns: By showing lenders personal and business income tax returns for the last three years or so, a borrower demonstrates work ethic and income.
  • Financial statements: These cover financial projections. Signed personal financial statements may be required for owners with a stake in the business in excess of 20 percent.
  • Bank Statements: These records will show account information for both the person seeking to borrow and, if applicable, the existing business.
  • Collateral: Naturally, loans that involve high risk factors—such as to a borrower with a bad credit history—will require substantial collateral. Borrowers can minimize the chances of being forced to offer valuable collateral by presenting strong business plans and financial statements. Regardless of a perfect credit score and an excellent business plan, borrowers should still be prepared to offer collateral that may be needed for the loan.
  • Legal Documents: Legal documents, such as business licenses, articles of incorporation, copies of contracts, franchise agreements, and commercial leases.

By being well-informed about SBA lending requirements, prospective borrowers will have an easier time obtaining loans.