How to Obtain an SBA Loan (PART 1 of 3)

SBA LOAN DEFINITION:          

Borrower:    Who is qualified for an SBA Loan?

A person who wants to borrow from a lender who finances SBA Loans needs to have these qualifications:

1.    EXPERIENCE - Requisite experience in the industry he is in or wants to participate in. Standard guidelines for this experience is a minimum of one year as an owner or manager. On a case-by-case basis, a Borrower can transfer experience in a different industry as qualification for this guideline.

2.    CASH - Requisite funds as a down payment and/or “cash injection” for the purchase or project including up-front costs charged by the SBA Lender.

3.    CREDIT - Requisite credit to qualify under the SBA Lender’s guidelines. There are national SBA Lenders who do not have a minimum credit score requirement.  However, a Borrower will have difficulty or not be able to qualify if there are these issues on a credit report:  late payments, charge offs, judgments, tax liens and the like.

4.    INCOME - Requisite of personal income into the Borrower’s household.  The industry standard for a borrower’s income into the household is $30,000 dollars.  An SBA Lender wants to make sure the borrower has enough household income to cover the borrower’s household expenses including food. (exceptions on a case-by-case basis with a letter of explanation)

5.    NET WORTH – (Always on a case-by-case basis) Requisite of the borrower having personal assets, which shows cash available for the down payment and any other additional cash injection.  During underwriting it may be determined that the Borrower needs other assets to be used for additional collateral: stocks, bonds, certificate of deposit, whole life insurance with cash value and the like.  Or in the case where the Borrower owns other businesses, the positive cash flow of these businesses.

 Joel Soforenko is an industry veteran having extensive experience with SBA 7(a), SBA 504 and USDA loans.  He has assisted borrowers as a loan originator, processor, underwriter and Manager of the SBA Department of a major origination platform. Joel is now the CEO of Continental Finance Capital Corp and can be reached at (617) 336-3215 x 5 or joel@continental.finance.