New Business SBA Loan Criteria

Pre-Qualify for an SBA Loan

 

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Criteria Needed for an SBA Loan

Each lender has its own criteria.   A lender will look at credit to see past history of on time payments.  Bankruptcies must be discharged for 7 years and will require a detailed explanation.  Established credit for the business will show the how the business has handled past and current obligations, just as your personal credit history does.  Purchasing a business will require seller’s financials, 3 years tax returns and current Profit and Loss and Balance Sheet. Pulling copies of business and personal credit reports and verifying for accuracy will allow you to verify all items are correct.

A lender will require documentation that shows the business will be able to repay the loan.  Below is the minimum that a lender will request:

  • A business certificate or license
  • A well-developed business plan
  • Resumes of key personnel
  • Articles of incorporation and bylaws
  • A business credit report
  • Business tax returns
  • A current business profit and loss statement
  • Projected financial statements for 12-24 months
  • A current business debt schedule
  • A business lease agreement
  • Personal tax returns
  • Personal financial statements for those who own 20 percent or more of the business

SBA Loan Approval Criteria New Business

  • Prepare a business plan which will describe in detail the type of business to be established.
  • Include in the business plan your experience and management credentials.
  • Prepare a detailed estimate of how much capital will be needed to start. State how much you have and how much you will need to borrow.
  • Prepare a current personal financial statement, listing all personal assets and liabilities.
  • Prepare a month-by-month projection of revenues, expenses and profit for the first twelve months. Include a companion cash flow projection for the same period. Explain your revenues expenses and profits in an accompanying narrative.
  • List the collateral to be offered as security for the loan, with estimates of the market value of each item.

My Solo 401k SBA Loan Process

  • Assist in preparing application
  • Finding lender that matches your needs
  • Verify complete documentation
  • Guide you through the process
  • Able to combine SBA loans with 401k business loan to fund the down payment without tax penalties.
  • SBA loans and 401(k) business financing can be used separately, may be combined to maximize your business financing

SBA 7(a)Loan

  • Used to purchase and existing business, expand to another location, buy equipment, acquire land or a building, or a combination.
  • average net income below $5 million.
  • Loan amount is up to $5,000,000.
  • Terms are up to 7 years for working capital, 10 years for equipment, purchase and startup. 25 years for real estate.
  • Rates are fixed or variable.

SBA Express

  • For loans less than $350,000
  • Ideal for smaller transactions
  • Term up to 7 years
  • No collateral required for less than $25,000

Using Your Retirement Funds as a Down Payment for an SBA Loan

Utilize your 401k as a down payment for your business loan.  Using your 401k funds without any tax consequences allows you to keep your savings intact for any unforeseen expenses.  SBA loans and 401k business financing have advantages on their own, but for the maximum benefits using these together can result in better cash flow for your business.

Using the ROBS 401k Funded Corporation Cash Flow as Collateral QUESTION:

I can personally guarantee the SBA loan but the firm as a whole cannot.  Does this also preclude us from using the company’s cash flow as collateral of sorts?

ANSWER:

If the company takes business loan or an SBA loan, the company will be the primary obligor and you may personally guarantee the loan. Of course, the lender will want to take the assets of the company as collateral and this is permissible.

SBA Loan Payments Business Expense QUESTION:

Is the debt loan payments a business expense from the company?

ANSWER:

Generally speaking, payment of the SBA business loan is considered to be a business expense-you should coordinate this specifically with your business tax advisor.

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