SBA financing Requirements: How To Qualify (2025)

Whether you’re starting a recent business or trying to scale an existing one, sometimes you require to borrow money to set the wheels in motion. 

A business financing can assist in areas ranging from financing purchase orders to hiring employees to building out manufacturing capacity. And one of the best forms of tiny business capitalization is an SBA financing. That’s because these loans are backed by the US tiny Business Administration (SBA), which often translates to lower yield rates and fees than other loans. However, SBA financing requirements can be more stringent compared to some other enterprise business loans.

That said, SBA financing requirements are well within reach for many tiny businesses. But before you get too deep into filling out an SBA financing application, it’s useful to comprehend general SBA financing requirements for startups (as well as established tiny businesses) and how eligibility differs among the various types of SBA loans, so you can focus on the capitalization that makes the most sense for your business.

Let’s receive a closer look at how to qualify for an SBA financing. 

General SBA financing eligibility

First things first: It’s significant to comprehend that SBA loans aren’t a monolith. 

For one, there are several different types of SBA loans, such as SBA 7(a) loans, which are the most ordinary but have several subtypes, and SBA 504 loans, which are geared toward fixed assets like real estate or machinery. Depending on which type of SBA financing you’re applying for, the eligibility requirements vary.

Also, SBA loans are not directly issued via the SBA. Instead, SBA-approved lenders, like some banks, issue loans to tiny businesses that are partially guaranteed by the SBA. So, while the SBA has sure guidelines that these approved lenders must pursue—like limiting financing sizes to between $500 and $5.5 million, depending on the type of financing—each lender can also have their own eligibility requirements that might be stricter than the SBA’s overarching guidelines.

That said, before you commence applying for SBA loans from SBA-approved lenders, it helps to comprehend the baseline SBA financing eligibility standards.

Business size and type

As the name suggests, you have to qualify as a tiny business to receive an SBA financing. The exact business size requirements vary by industry, but a ordinary guideline is having fewer than 500 employees. 

sure industries have size standards, usually based on annual receipts, which can vary significantly, even among similar sectors. For example, food service contractors can have a maximum of $47 million in annual receipts to qualify as a tiny business by the SBA, while caterers can have a maximum of $9 million.

You can use the SBA’s online Size Standards Tool to view if you qualify as a tiny business. 

Also, only sure types of businesses are eligible for SBA loans. While the scope is pretty broad, sure types of businesses are ineligible, such as those primarily engaged in lending, life insurance companies, and those that earn more than one-third of their annual gross returns from gambling.

For-returns operation

Another baseline requirement for SBA loans is that you have to be a for-returns business. The only exception is that a for-returns subsidiary of a non-returns could still be eligible.

US-based business

Location also matters for SBA financing eligibility. To qualify, your business must physically be located and operate in the US. This extends to both US states and US territories. Also, businesses generally have to either be majority-owned by US citizens or lawful permanent residents.

financing score minimums

financing score requirements can vary based on the lender and the type of SBA financing, and it’s feasible to still qualify for an SBA financing with impoverished financing. However, you should check with lenders about what their financing score minimums are, if any, and recognize that sure types of loans do have floors. For example, SBA 7(a) tiny loans require a minimum FICO tiny Business Scoring Service (SBSS) score of 155.

Owner’s invested stake

The SBA has loosened some requirements around how much stake a business owner has to have in the business to qualify for an SBA financing. But when a complete transformation of ownership is made, for example, 7(a) loans above $500,000 generally require a 10% stake injection from the owner, though lenders may have their own requirements that differ.

guarantee expectations

guarantee expectations can also vary by lender and SBA financing type, so you may desire to do some digging based on what financing you’re interested in applying for.

To provide you a general concept of what to expect, though, consider that the SBA does not require guarantee for some loans, such as 7(a) tiny and SBA Express loans of $50,000 or less. Others, however, like 504 loans, generally are secured based on the assets the funds are used to purchase, and thus 504 loans can’t be used for purposes such as working financing.

Down remittance considerations

Here too, SBA requirements vary by lender and SBA financing type. In general, though, you can expect lenders to require around a 10% to 20% down remittance for the amount you desire to borrow.

Although that might seem counterintuitive, putting in some of your own money to then borrow more helps align you with lenders and can make them more comfortable providing you with the financing, since you have something at stake too.

financing not available elsewhere

This financing requirement is a bit more complicated and something that lenders can assist you with, but in general, SBA loans are meant to back tiny businesses that can’t discover high-standard capitalization elsewhere. 

Thus, you require to be in a position where you can’t obtain reasonable financing terms elsewhere, such as due to impoverished financing or simply if other lenders have significantly higher yield rates than what an SBA financing offers. However, you don’t necessarily have to apply for other loans first, as your lender may be able to certify that financing is not available elsewhere for your business in terms of satisfying this SBA requirement.

Personal guarantees

Those who own 20% or more of a business obtaining an SBA financing generally have to sign a personal guarantee, meaning they’re personally liable for repaying the financing if the business can not.

Specific requirements by financing type

Different types of SBA loans propose different maximum financing amounts, usage limitations for funds, application processes, etc. As such, the eligibility requirements also differ by financing type. Beyond the baseline requirements like being a for-returns business in the US, some specific requirements by SBA financing type include the following:

7(a) loans

SBA 7(a) loans are the main type of SBA capitalization, though there are several subtypes of 7(a) loans. For standard 7(a) loans, some specific requirements include:

• financing size between $500,001 and $5 million 
• Personal financing score of around 640 or higher with a demonstrated ability to reasonably repay the financing are often required; some lenders have higher requirements, such as a 690 or higher personal financing score
• A 10% down remittance is often required
• Funds can be used for most purposes, such as working financing, acquiring real estate, purchasing machinery, and obligation loan modification

Some SBA 7(a) financing requirements, however, differ based on the subtype and the specific lender. For example, 7(a) tiny loans are for financing sizes that are $500,000 or less, and for ones that are $50,000 or less, not including International Trade Loans, the SBA does not require guarantee, though sure lenders might. Lenders can also make their own creditworthiness determinations for 7(a) tiny loans without an SBA review.

504 loans

SBA 504 loans differ from the 7(a) SBA financing program in several ways. For one, the purpose of 504 loans is specifically for capitalization major fixed assets. Also, these loans are only issued through Certified advancement Companies (CDCs), which are non-profits, as opposed to private lenders that issue 7(a) loans. 

In terms of eligibility, some distinctive requirements of 504 loans include:

• The business must have a tangible total assets below $15 million
• For two years preceding the 504 financing application, average net returns each year needs to be less than $5 million after federal returns taxes
• Loans can only be used to finance assets that spur business and job growth, such as purchasing or constructing recent buildings or long-term machinery, or improving or modernizing assets like existing facilities; in contrast to 7(a) loans, 504 financing proceeds can’t be used for purposes such as working financing or inventory
• Maximum financing amount of $5.5 million
• While varying by lender and circumstance, down remittance may be higher than 7(a) loans, such as requiring a 20% versus 10% down remittance; similarly, financing score requirements may be higher, such as requiring a 680 or higher personal financing score, but this can vary

SBA Express financing

SBA Express loans are a subtype of 7(a) loans, yet these leave a lot more up to the discretion of the lender, as the maximum SBA guarantees for these loans is lower (up to 50% versus up to 75% for standard 7(a) loans). As such, the eligibility requirements vary by lender but generally can be considered to be looser than 7(a) financing requirements. 

Some key considerations for SBA Express loans include:

• Maximum financing size is $500,000
• SBA does not require lenders to receive guarantee for loans up to $50,000, and while guarantee may be required based on a lender’s policy for loans above $50,000, Express loans can’t be denied strictly due to lack of guarantee
• Can be a revolving line of financing rather than a traditional financing

SBA CAPLines financing

SBA CAPlines refers to a financing program that provides short-term working financing lines of financing (either revolving or non-revolving) through a few different subtypes. For example, Seasonal CAPLines are used to financing seasonal needs, like higher inventory purchases during holiday periods.

Working financing CAPlines provide financing to those who aren’t eligible for other long-term financing options, with debt servicing based on converting short-term assets, such as accounts due amount, into funds. 

The main eligibility criteria for CAPLines is that proceeds are used for short-term operating financing, but not uses like capitalization a transformation of ownership. There are also some specific eligibility criteria for different types of CAPLines, such as how Working financing CAPLines borrowers require accounts due amount and/or inventory to qualify for capitalization.

To view the packed SBA financing requirements specific to the financing you’d like to apply for, you can dive into the SBA’s documentation and talk to an SBA-approved lender for more specific guidance. 

Documents you’ll require

In addition to conference the aforementioned eligibility requirements, tiny businesses also require to now several documents as part of an SBA financing application. Some ordinary documents include the following, though recall that there can be variances based on factors like the financing type and lender:

strategy document

Showing lenders your strategy document can assist you meet criteria like demonstrating a reasonable ability to repay the financing, based on your strategy document indicating that you have a path for generating returns. The level of specific needed and importance of the strategy document can vary by lender and based on factors like the age of your business. Startups, for example, may have limited monetary statements and thus the strategy document may be weighed more.

The SBA has sample business plans available online that you can review if you’re not sure how to make one. 

monetary statements

Lenders also desire to view your business’s monetary statements, such as:

• Current returns statements and settlement sheets
• financial year complete returns statements and settlement sheets for the history three years, if applicable
• funds flow projections, which typically should display positive funds flow within two years

These monetary statements may be needed for specific financing criteria, like 504 loans that display your business does not exceed total assets or net returns thresholds, or lenders may simply desire to view monetary statements as part of assessing your creditworthiness. The stronger your monetary statements are, the better financing terms you typically can receive, such as qualifying for lower yield rates.

In addition to these business statements, lenders also generally desire to view personal monetary statements—including from spouses—of those who own 20% or more of a business to assess your creditworthiness, particularly when owners provide personal guarantees for SBA loans.

levy returns

Connected to monetary statements, applicants also typically require to provide levy returns for the history three years, though startups may still be eligible if they don’t have that history. Here too, you may require to supply both business and personal levy returns, if applicable.

Legal documents

Be prepared to provide legal documentation regarding your business, which can vary based on your business structure but may include documents such as:

• Articles of incorporation or articles of organization
• collaboration agreements
• Business licenses
• Legal judgments for or against your business

Alternatives to SBA business loans

While SBA loans propose several positives, such as often having lower yield rates than non-SBA loans, not everyone qualifies, nor do all businesses desire to leave through the SBA approval procedure, which can be cumbersome.

Instead, Shopify store owners can turn to alternatives like a merchant funds advance or working financing financing with Shopify financing. Rather than having to meet sure SBA lender criteria like minimum financing scores or down payments, your eligibility for Shopify financing is based on several factors that determine the health of your business, including sales history. There are no limitations on how you can use capitalization for your business needs.

*Shopify financing loans must be paid in packed within a maximum of 18 months, and two minimum payments apply within the first two 6 month periods. The actual duration may be less than 18 months based on sales.