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The retail industry has always been competitive, but recent shifts have turned up the pressure. Customer expectations are high, e-commerce is expanding at record speed, and the cost of doing business continues to rise. Yet, opportunities are still available to business owners who are prepared to adapt quickly.

Success often comes down to having the right amount of capital at exactly the right moment. Whether you’re looking to upgrade your online platforms, expand into new locations, or simply stock enough inventory to keep up with peak demand, a retail business loan from the Small Business Administration (SBA) could make all the difference.

Backed by federal guarantees, SBA loans offer retailers competitive rates, flexible repayment terms, and the ability to use funds for anything from inventory to store renovations. This financial backing can give you the ability to confidently invest in growth, more effectively manage seasonal swings, and take advantage of opportunities that come your way.

How to use SBA loans to tackle your biggest retail needs.

There are several different types of SBA loans for retail business, with options designed to address different priorities, timelines, and funding amounts. Here are a few ways you can use this versatility to your advantage.

Get flexible funding with SBA 7(a) loans.

With loan amounts up to $5 million and repayment terms extending to 25 years for real estate purchases, SBA 7(a) loans allow retailers to fund a broad range of needs. This can range from working capital and equipment purchases to refinancing certain debts or even acquiring another business, offering a significant advantage to retailers balancing multiple priorities.

Speed up inventory purchases with SBA Express loans.

When you spot a hot-selling product or need to stock up quickly for an unexpected surge in demand, waiting months for loan approval isn't an option. SBA Express Loans cap at $500,000 but offer much faster processing. They’re often approved within 36 hours. While interest rates are often slightly higher than some other SBA loans, they can be an excellent option for time-sensitive financing needs.

Build your retail presence with SBA 504 loans.

If you’re looking to purchase a storefront, warehouse, or major equipment, an SBA 504 Loan may be your best option. Specifically designed for real estate and fixed asset purchases or improvement, this loan option offers low interest rates and long repayment terms. Many retailers use 504 loans to enhance their customer experience and increase operational efficiency.

Start small with SBA Microloans.

SBA Microloans are often an excellent option for retailers with smaller funding needs. They make it easy to secure up to $50,000 with more relaxed qualification requirements. These loans also come with business counseling and support, making them ideal for first-time business owners or retailers expanding into new product lines.

What SBA lenders want to see in your retail loan application.

When applying for an SBA loan, it’s important to show the lender that you understand the factors that drive your business and have a clear plan for using the funding effectively. For retailers, a strong application highlights:

• Strong inventory turnover ratios: Show that your products move consistently and that you have systems in place to avoid overstock or stockouts.
• Proven location performance: Include foot traffic data, nearby business activity, and demographics that show your store’s potential.
• Integrated sales channels: Demonstrate how your e-commerce and in-store operations work together to reach more customers and drive year-round revenue.
• Realistic financial projections: Include seasonal variations in your cash flow forecasts. Lenders appreciate applicants who acknowledge slow months rather than projecting steady growth year-round.
• Solid management experience: Having a strong personal background or an experienced management team can make a big impact.
• Emergency cash reserves: Show that you have a backup plan (such as a credit line or cash reserves) to cover slow periods or unexpected expenses.

You don’t need to have every item in place to qualify, but the more of these items you can present, the stronger your application will be.

Turn your SBA loan into better inventory management.

Using retail loans for inventory financing allows you to maintain optimal stock levels without tying up your cash. To optimize this, set up automatic reorders based on sales velocity and use funds to take advantage of bulk purchase discounts during off-peak seasons. Just be sure to track your inventory turnover monthly to ensure loan payments align with actual sales cycles.

Put SBA financing to work for your next expansion.

Expanding your footprint can create exciting opportunities, but many retailers underestimate the time needed to reach profitable sales levels after opening the doors. To protect your investment, secure a small business loan before signing a lease and add a 3-to-6-month payment buffer into the loan amount. This will help cover expenses during the construction and initial ramp-up periods.

Invest in e-commerce and digital growth with SBA funding.

Many retailers use SBA loans to upgrade their online presence. This may include investing in features like an updated POS system, an improved online store, or mobile payment integration. Focus on choosing tech investments that directly increase sales or reduce operational costs, and treat them as long-term assets, matching repayment schedules to the returns they’re expected to generate.

Avoid these common SBA loan mistakes.

Even savvy retailers can sometimes make mistakes with their SBA loans. These three pitfalls typically cause the most problems:

• Over-leveraging during peak seasons: Don't assume holiday sales will cover excessive borrowing. Use conservative projections and keep emergency reserves for slower months.
• Inadequate cash flow planning: Map out your entire year, including seasonal dips. Plan for loan payments you can cover in your lowest revenue months, not your best ones.‍
• Inventory mismanagement: Track purchases and sales closely. Failing to maintain accurate inventory records may lead to noncompliance with SBA loan terms.

Create lasting retail success with your SBA loan.

When managed well, SBA loans can help retailers build sustainable, profitable businesses. To improve your chances of success, align the funds with a solid growth strategy, stay ahead of payment schedules, and stay compliant with program requirements.

Ready to explore SBA financing for your retail business? Lendio connects you with lenders who understand the industry and can help you find the right funding solution. Check your eligibility to get started.

So, you’ve been approved for a small business loan—congratulations! You can now use that loan for the things you need, whether that’s expansion, new acquisitions, equipment financing, or bridging cash flow gaps.

But getting SBA approval is just the beginning. You’ll also need to plan ahead for cash flow deficits, keep up with compliance and reporting obligations, and manage your SBA loan funds effectively so your company can continue to grow and thrive with minimal financial risk.

Payment management and financial discipline.

A crucial part of SBA loan management is prioritizing loan repayment. After all, falling behind could negatively impact your finances and make it harder to qualify for future loans.

Here are some ways to ensure you keep up with payments.

• Set up automatic payments to avoid late fees—This is generally best if you have consistent cash flow and can guarantee sufficient funds in your account when payment comes due.
• Budget in loan payments—Add a separate category in your budget to ensure you don’t fall behind.
• Cut down on other expenses—If funds are tight, seek ways to reduce other expenses as needed to prioritize the loan.
• Pay more than the minimum when possible—If you have extra cash flow, put it toward your loan to pay it down faster (but check for a prepayment penalty first).
• Avoid taking on new debts—Managing an SBA loan is much easier when you don’t have additional debts to worry about.
• Pay down other debts—If you’re juggling several loans, look for ways to pay debts with higher interest rates or shorter terms to free up cash.
• Understand your payment schedule and terms—Review the loan details so you don’t get blindsided by irregular repayment due dates, high or variable interest rates, or fees.

Cash flow planning.

As a small business owner, you might experience periods of inconsistent or even negative cash flow. Planning ahead can help keep your financials on track and ensure you never fall behind on loan payments.

You can do this by:

• Creating payment calendars aligned with business cycles—This makes it easier to plan for upcoming expenses, revenues, and cash flow gaps.
• Building payment reserves—These can keep you going strong during slower months.
• Monitoring your debt-service coverage ratio (DSCR)—This shows lenders that your company can repay its debts (shoot for a DSCR of 1.00 or above).
• Tracking your cash flow—This will give you a better understanding of your company’s current liquidity, financial obligations, potential shortfalls, and future cash flow trends.

Need some extra guidance on cash flow? Check out Lendio's in-depth guide on cash flow management.

Consequences of payment issues.

Before taking on a small business loan, know that there are consequences to falling behind on payments. While the SBA offers temporary debt relief to some borrowers, not everyone qualifies.

Missing even one payment could put your loan in “delinquent” status. The lender may contact you requesting payment. In the meantime, interest and possible late fees will still accrue.

Left unpaid, your SBA loan will go into default—usually within a few months of that initial missed payment. At this point, a few things could happen:

• Late or missed payments can affect your business—and sometimes personal—credit score, making it harder to qualify for future financing.
• The lender could attempt to take any collateral associated with the loan (including business equipment or real estate) to recoup the financial loss.
• If you signed a personal guarantee, the lender may also seize personal assets like bank funds or your home.
• If your business or personal assets don’t fully cover the unpaid debt, the lender may request that the SBA pays the remaining amount (up to the government-insured percentage).
• Defaulting could trigger the acceleration clause (making you responsible for repaying the remaining balance plus interest all at once).
• The lender may continue to pursue repayment through a lien or wage garnishment.

If you’re starting to worry about falling behind on payments, reach out to your lender right away about your options.

Compliance and record-keeping.

Certain SBA loan programs have continuing compliance requirements. Here's how to maintain compliance while managing your SBA loan post-funding:

• Review the loan agreement for ongoing compliance or record-keeping requirements.
• Keep accurate documentation of SBA forms and certification (including SBA form 1050, which verifies loan proceeds were disbursed as intended).
• Keep clear records of your business's financials, operations, and fund usage in case of future review or audit.
• Stay on top of payments.

Lender relationship management.

It helps to keep the lines of communication open with your lender and, in the case of the SBA 504 program, Certified Development Company(CDC). Through proactive communication with your lender, you could potentially:

• Get ahead of potential issues before they arise.
• Work through challenges like past-due payments related to temporary cash flow issues.
• Restructure your loan terms to help manage payments.
• Discuss other solutions like debt refinancing, debt consolidation, or forbearance.
• Build a lasting borrower-lender relationship.

Planning and risk management.

As a small business owner, it’s important to plan for the unexpected. You can do this by:

• Monitoring your business’s real-time performance compared to its projections using KPIs, profit margins, cash flow, and other key metrics, alongside financial goals.
• Getting the right business insurance (ex. general liability insurance or commercial property insurance) to protect your firm against lawsuits, natural disasters, and accidents beyond your control.
• Building cash flow reserves to protect yourself against financial risk and economic downturn.

Find the right lender for your business.

Successful SBA loan management means knowing how you’re going to use—and repay—the funds. It also means understanding the risks and doing what’s needed to maintain compliance and set yourself up for success.

Part of this means finding a lender willing to work with you through the ups and downs of business ownership. If you’re thinking about getting financing for your small business, apply now through Lendio’s marketplace. We’ll help you find the right partner and solution for your needs.

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For Porters Bar, a family-run neighborhood spot, the summertime off-season meant slow months and ongoing bills. “We’d end up going into debt, and paying it back would take all season, so we couldn’t build up a pile of savings,” says owner Scott Nogueira.

After several traditional lenders, including his bank of 17 years, turned down his request for small business financing, Scott turned to Lendio. According to Scott, the loan he received “totally saved my business.” With access to the financing they needed, Porters Bar was positioned for growth, setting the stage to surpass $1 million in annual revenue.

Stories like this are familiar to many business owners. Finding reliable, affordable funding for everyday expenses is often one of the toughest parts of running a business. An SBA working capital loan may help bridge the gap between income and expenses, giving you room to manage daily operations without losing focus on your long-term goals.

Working capital loans support daily business operations.

The term “working capital” refers to the funds businesses use to cover operational expenses. This often includes items such as payroll, inventory, rent, utilities, and payments to suppliers.

Unlike long-term financing, which is often used for investments such as equipment or expansion projects, working capital loans typically have short- to medium-term repayment periods. They are designed to bridge the gap between costs and revenue, helping to keep businesses running smoothly from week to week.

SBA working capital loans are backed by the U.S. Small Business Administration. This lowers the risk for lenders, often resulting in lower interest rates, longer repayment terms, and higher approval rates when compared with traditional loans. The SBA guarantee may also improve approval odds for businesses that do not qualify for financing through conventional channels.

Choose the right SBA loan program for your working capital needs.

While there are several different types of SBA loans, only a few are well-suited for working capital needs. The right option depends on several factors, such as how quickly you need the funds, the amount of capital needed, and whether you have one-time or ongoing needs. Here are a few programs to consider.

SBA 7(a) Loans

The SBA 7(a) loan is the most flexible option and is also the most commonly used. Funds may be used for a wide range of purposes, including working capital, inventory purchases, and refinancing certain types of debt.

Loans are available for amounts ranging from $350,000 to $5 million, and when used for working capital, repayment terms can extend for up to 10 years. While rates are negotiated between the borrower and the lender, they must fall within SBA guidelines and are typically lower than conventional loan rates.

SBA Express Loans

SBA Express loans offer faster turnaround times, with decisions typically made within 36 to 48 hours. These loans are designed for smaller, time-sensitive needs.

Loan amounts cap at $500,000, with repayment terms similar to the standard 7(a). Interest rates may be slightly higher, but the application process is more streamlined, with fewer documentation requirements.

SBA CAPLines (Lines of Credit)

The SBA CAPLines program offers four specialized lines of credit for small business owners. The first three are suited specifically for seasonal, contract, and construction businesses, while the fourth is a general-purpose line of credit for day-to-day business operations.

Unlike loans, lines of credit allow you to draw funds only when needed, up to a maximum approved balance. Due to the added flexibility, CAPLines may have slightly higher interest rates when compared to other types of SBA loans.

Common uses for SBA working capital loans.

When incoming revenue can’t keep up with expenses, many business owners turn to a working capital loan to help cover critical costs and avoid disruptions. Common uses include:

• Payroll: Ensuring employees are paid on time and keeping the business fully staffed, even during slower periods.
• Vendor payments: Covering the costs of necessary inventory and avoiding late payments, protecting supply chains and vendor relationships.
• Marketing and promotions: Funding short-term campaigns to boost visibility and drive sales, particularly during the off-season.
• Fixed operating expenses: Managing rent, utilities, and other fixed costs that continue regardless of business cycles.
• Covering accounts receivable gaps: Smoothing over delays in payment or billing cycles that create cash flow disruptions.

While these are some of the most frequent uses, you can use working capital loans to address nearly any operational expenses that affect your daily cash flow.

Unique advantages of SBA working capital loans.

Government backing gives SBA working capital loans several advantages that traditional financing typically can’t match. They often come with lower interest rates and longer repayment periods, giving you more time to stabilize monthly cash flow without the added pressure of aggressive payment schedules. You'll also have the flexibility to use the proceeds for virtually any operating expense, making them well-suited to a range of industries and needs.

SBA loan programs are designed to improve access to funding for underserved groups, such as minorities, women, and veterans. This may result in greater access to cash flow solutions, even for those who were previously denied a loan with a conventional lender.

Eligibility criteria for SBA working capital loans.

To qualify for an SBA working capital loan, you must own a for-profit business based in the United States. The business must also meet the SBA’s size standards, which typically include having fewer than 500 employees.

While there’s no universal SBA loan credit score requirement, most lenders prefer businesses with strong credit. However, SBA Express Loans and CAPLines may allow for slightly lower scores. Generally, lenders prefer applicants with at least one to two years in business, though startups with strong business plans or secured contracts may also be able to secure funding.

It’s critical to show consistent revenue and demonstrate an ability to repay the loan. One way lenders evaluate this is through your current ratio, which measures whether your current assets are sufficient to cover your current liabilities. It's calculated by dividing current assets by current liabilities, with a ratio above 1.0 generally being considered a sign of good short-term financial health. In some cases, SBA loan approval may require you to make a personal guarantee or put up collateral, especially for higher loan amounts.

How to successfully apply for an SBA working capital loan.  

A bit of preparation can go a long way toward strengthening your SBA loan application and expediting the approval process. Start by organizing your financial documents, including:

• Recent personal and business tax returns
• Profit and loss statements
• Balance sheets

Be prepared to clearly explain how you'll use the funds and how they'll benefit your operations or support growth. Vague requests can raise red flags, while detailed, thoughtful plans increase lender confidence.

Keep in mind that transparency builds trust. If your business has experienced revenue dips or faces seasonal challenges, explain these patterns and present a realistic recovery plan. Lenders appreciate honesty and want to see that you understand your business cycles.

Finally, explore multiple lenders before committing to a loan offer. Each lender may take a different approach to evaluating your application based on their specific criteria. Applying for an SBA working capital loan through a marketplace like Lendio may increase your chances of finding the right lender and loan terms for your needs. Check your eligibility today.

As a small business owner, you might assume you won’t qualify for financing without significant collateral. But with an SBA loan—backed by the Small Business Administration—you could get the funds you need even without traditional assets. However, you’ll still need to meet certain requirements and demonstrate an ability to repay.

Here’s the importance of collateral in the SBA loan process, what qualifies as SBA loan collateral, and how to navigate the process confidently and effectively.

What is collateral in business lending?

Collateral refers to the assets or property pledged to a lender in exchange for funds. If the borrower doesn’t repay what they owe, the lender can seize the asset instead.

Some small business loans—called secured loans—require collateral as it can reduce risk in case of borrower default. Unsecured loans don’t rely on collateral, which can make them riskier to the lender. Because of this, borrowers may face stricter lending criteria.

Collateral comes in many forms, and it may be physical or non-physical. The type of collateral and amount needed depends on the lender, loan program, and loan amount. But having it can make it easier for borrowers to qualify for funds.

Note that some lenders will only accept business assets as collateral. This may include the things your company owns, like machinery or commercial real estate. Others, including some unsecured loans, may require a personal guarantee. This is essentially a promise the borrower makes to repay their debt if their business cannot.

Want to learn more about the basics of collateral, including what typically qualifies as collateral and what to do if you don't have any? Here's everything you need to know about collateral for a business loan.

How SBA loans handle collateral differently

The SBA program is designed to help borrowers who may lack strong collateral but can provide proof that they can still repay their debt. Most SBA loans are guaranteed by the U.S. government up to the following amounts:

• 75% for most 7(a) loan programs above $150,000
• 85% for most 7(a) loans programs under $150,000

The SBA also guarantees up to:

• 50% for SBA Express Loans
• 90% for Export Working Capital Program, Export Express, and International Trade Loans

This partial guarantee means less risk to the lender in case of default. It also means SBA lenders may be more flexible with collateral requirements compared to traditional banks.

Of course, collateral is still important, and many SBA loans do require it. But a lack of collateral doesn’t automatically disqualify a borrower from financing.

Collateral requirements by SBA loan type

SBA loan collateral requirements depend on several factors, including loan amount and type. These are the typical guidelines for business owners and what qualifies as collateral for different SBA loans.

SBA 7(a) Loans

The SBA 7(a) loan program includes Standard 7(a) loans and 7(a) small loans.

Standard 7(a) loans come in amounts ranging from $350,001 to $5 million. They’re considered “fully secured,” meaning all assets being acquired, improved, or refinanced using the loan must be pledged to the lender. This also applies to additional fixed assets valued up to the loan amount.

Meanwhile, 7(a) small loans cap out at $350,000. Loans for $50,000 or less typically don’t require collateral. Anything above that requires lenders to take any available collateral.

For loans over $350,000, adequate collateral is preferred. However, the SBA won’t decline a loan solely for insufficient collateral if the borrower demonstrates the ability to repay.

SBA Lenders may file a UCC-1 lien to secure the loan against business assets. Check the loan agreement for details.

SBA 504 Loans

SBA 504 loans are secured by the fixed assets being financed. This is usually commercial property or large equipment.

These loans cap out at $5.5 million. The funds come from three sources:

• Bank or credit union (50%),
• Certified development company or CDC (40%)
• Borrower (10%)

With an SBA 504 loan, the bank serves as the first lien. There’s also generally a second lien position from the CDC portion of the loan.

SBA Express and CAPLines

These are similar to 7(a), but may have faster processes and varying collateral thresholds depending on lender policy.

The SBA Express program caps out at $500,000, but lenders may not require collateral for loans under $50,000. Loans exceeding that amount may have lender-specific requirements.

CAPLines has its own limits and requirements. These are largely based on the specific program.

Other SBA loans

Under the SBA program, there are several other small business financing options. Each one has its own collateral requirements. For example:

• Microloans—These cap out at $50,000, but intermediaries may require some kind of collateral
• Disaster loans—Loans exceeding $50,000 require collateral‍
• International trade loans—These cap out at $5 million and have separate collateral requirements

Types of acceptable collateral for SBA loans

Types of acceptable collateral for SBA loans include:

• Real estate—commercial or personal property (especially with equity)
• Business equipment—machinery, vehicles, computers, tools, etc.
• Inventory—retail or wholesale stock that can be sold or liquidated
• Accounts receivable—invoices due from customers
• Cash savings or deposits—from business or personal accounts
• Financial instruments—stocks, bonds, etc.
• Personal assets—personal property and a personal guarantee may be required

Personal guarantees

A personal guarantee isn’t physical collateral, but rather a legal commitment to repay the loan if your business fails. It may increase your chances of getting approved, but it also puts your personal assets at risk. This is because the lender can still come after you—and your personal property—for repayment.

The SBA requires personal guarantees from any business owner with at least a 20% stake in the company. Some lenders may require multiple guarantors or multiple individuals to offer a personal guarantee.

What happens if you don't have enough collateral?

If business collateral is limited, an SBA lender might accept personal assets instead. In some cases, such as with certain loans under $50,000, they may waive the collateral requirement altogether. You’ll still need to provide a personal guarantee, though.

Generally, lenders will document what’s available and evaluate based on factors like:

• Collateral
• Personal and business credit profile
• Any recent delinquencies or bankruptcies
• Business financials (including cash flow and debts)
• Your business plan
• Down payment (if applicable)

The SBA specifically states that loans should not be declined solely due to a lack of collateral. As long as there’s a reasonable assurance of repayment, you could potentially qualify. Lenders may also ask you to offer whatever assets you have, even if they don’t fully secure the loan.

Collateral is just one piece of the puzzle

SBA loan collateral requirements vary by program, loan amount, and other factors. But thanks to the SBA’s guarantee, small business owners may find it easier to access the funding they need even when traditional lenders would shut the door.

With the right financial foundation and preparation, most borrowers can find a path forward—even with limited collateral. If you’re ready to explore your options, consider applying now with Lendio.

Getting a business loan can be the difference maker when starting a new venture or even expanding upon an existing offering, and there’s significant funding available to qualify businesses. In fact, the Small Business Administration (SBA) approved over $31 billion through its 7(a) loan program in 2024 alone.

But this money doesn’t come without some work on your part, and most reputable business loans require documentation of your creditworthiness and ability to repay. Whether you’re trying for an SBA loan or another funding option, you’ll need to provide the proper paperwork to back up your case.

Why preparation matters in the loan process

Having your documents complete and organized can significantly speed up the approval process. Without them, you could experience an unnecessary delay or even decline (even if you’re otherwise well-qualified). For each piece of missing or unclear documentation, the lender needs to reach out at least once, and too many back-and-forths could leave your loan in limbo.

Worse yet, a messy or incomplete set of loan documentation may give the lender the wrong impression. It’s more likely that you’ll hand over incorrect calculations or outdated tax papers instead of what’s needed to prove your profitability and get the “yes” you really need.

There’s no one-size-fits-all application packet you can use to apply for multiple loans, but many of the required documents will be the same from lender to lender. Whether this is your first loan attempt or your third, this loan application checklist can help you save time and frustration in your funding journey.

The ultimate small business loan checklist

Even if you’re not looking to borrow money just yet, having these essential documents handy can reduce preparation work when the time comes.

Business information

• Legal business name: The official, registered name of your company and any “doing business as” (DBA) names, if applicable. You can find this on your state or local business registration documents.
• Business address and contact info: The physical location and primary contact details for your company, as listed on company records, utility bills, or vendor statements.
• Business structure: Listed as Limited Liability Corporation (LLC), S-Corp, C-Corp, partnership, or sole proprietor in your incorporation documents or state registration filings.
• Employer Identification Number (EIN): This IRS-assigned tax ID number can be found in your confirmation letter or online IRS account.
• Business license and registrations: These are usually given by your local, state, or federal licensing authority, depending on your business type.

Loan request details

Consider how much and what kind of loan you’ll need before you apply. You’ll need to provide:

• Loan amount requested: The specific dollar amount you wish to borrow, including any fees.
• Intended use of funds: A brief explanation of how you’ll spend the money, including hiring, new equipment, or working capital.
• Desired loan type: The type of funding you’re seeking (example: an SBA 7(a) loan, or other, like a line of credit, or short-term funding.

If you know your desired repayment terms, you can list them as well. (Refer to the lender’s term sheet, if available.)

Personal information

In addition to the company’s information, you’ll need to provide information for the owner or sole proprietor. This often includes:

• Government-issued ID, such as a driver’s license or passport.
• Social Security Number, to help in the credit check process.
• Personal address and contact phone number.
• Ownership percentage, which can be found in the operating agreement or company bylaws.
• Personal finance statement, or a summary of your personal assets, liabilities, income, and expenses, is found within your personal finance software or bookkeeping tools.

Business financial statements

These essential financial statements show the bank how you’re doing and your prospects for the future. You can usually find them in your accounting software or request them from your accountant.

• Profit & Loss Statement: Covering the last 1-2 years, this should show revenue, expenses, and net income over a period.
• Balance sheet: This rundown of assets, liabilities, and equity is a snapshot of a certain date and
• Cash Flow Statement: It reports the money flowing in and out of your business during a set time.
• Year-to-date financials: The most current financial data for the ongoing year, plan to run this right before you apply.

Tax returns

Include both a set of your business and personal tax returns, which you can get from your accountant or tax preparer.

• For business: Show the last 2 years, including any forms that show income, expenses, and liabilities.
• For personal: Show at least a year for each of the major owners or partners.

Don't have tax returns for your business available? Read our guide to no-doc business loans for business loan options without tax returns!

Bank statements

Provide three to six months of bank statements for all accounts tied to your business. Small proprietors or very small businesses should have personal bank statements available, as well.

Business plan

Startups and those applying for SBA loans should be prepared with a business plan, which contains, at a minimum, the following sections:

• Executive summary: This short overview states your business purpose, goals, and the plan for the loan request.
• Business model and revenue strategy: Describe how your business makes money and uniquely serves customers.
• Competitive analysis: This gives an overview of competitors with similar offerings and how you’ll compete against them in the marketplace.
• Financial projections: A forecast of future revenue, costs, and profits, it’s usually created for the next three to five years and can be prepared with your accountant.
• Use of funds breakdown: This detailed list shows how the loan money will be spent, dollar by dollar.

Debt schedule

Most businesses owe at least some money on credit cards or with previous loans. These documents demonstrate this, so lenders know what type of risk they will be taking. Include all current business debts, including current loans and credit lines, the lender names, balances, monthly or quarterly payment amounts, and due dates.

Additional documents (depending on loan type)

Different loans have varying requirements. Consider having this paperwork available just in case:

• Accounts receivable aging reports: These detail unpaid customer invoices by date and can be found within your accounting software.
• Commercial lease agreement: If you rent space, you’ll need to provide a signed lease from your landlord to establish your business’s right to operate at your location.
• Equipment invoices or quotes: Requests for equipment financing require these, which you can get from your equipment seller or dealer.
• Articles of incorporation or partnership agreements: These legal documents establish your company or partnership and show the ownership structure. Request them from your state filing authority or your business legal professional.

Special considerations for SBA Loan requirements

SBA loan amounts can be higher, so the application process is often more document-intensive. Be prepared to show a higher level of detail with thorough financial disclosures than what you may need for smaller loans through private lenders.

There’s no standard SBA checklist, since lenders administer the loans in their own way, but expect to provide standard information on certain SBA-specific forms, such as Form 1919 (Borrower Information Only) and Form 413 (Personal Financial Statement).

Personal and business credit scores can carry more weight than with other lending programs, so take the time to check your score before you apply and resolve any outstanding issues that could hold you back from an approval. Also, SBA loan requirements often include a business plan. You can read up on how to create one in our step-by-step business plan guide.

Tips to streamline the application process

Since you’ll be asked to provide your most updated copies of each document, it may be helpful to digitize (scan or download from each website) before applying. This way, you don’t have to rummage through paper stacks and can quickly send documents to the lender via their secure online processes. Also:

• Store your documents in a secure cloud folder with two-factor authentication (2FA) so only you can access it.
• Update your documents and financial calculations each month to keep them accurate and available.
• Work with your accountant or CPA to validate numbers before sending to a lender.
• Check your credit reports well in advance of applying, so you have time to dispute or fix any errors.

Set yourself up for success

A business loan opens the door for expansion and new opportunities, and – in some cases – it may be just what you need to stay afloat in uncertain times. No matter what you intend to use the money for, loan approval depends on not just what you ask for, but how well-prepared you are to ask for it. Referring to this checklist early and often can reduce the number of surprises that arise during the application process and can keep your loan request moving as quickly as possible through what can be weeks or even months of qualification.

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An SBA loan may be just what you need to level up your business and stay competitive. While having a strong credit score improves your chances of qualifying and getting better loan terms, some lenders allow flexibility. It’s possible to get approved even with bad credit in some cases.

However, understanding SBA loan requirements can greatly improve your chances of hearing “yes” from a lender and can cut down on application time. This article covers the different loan types, minimum requirements, and steps you can take to improve eligibility, even if your credit is less than ideal.

Can you get an SBA loan with bad credit?

It’s true that a better score often leads to better credit terms, but approval can also depend on these factors:

• The specific loan program or type of loan you’re applying for
• The lender’s internal lending rules and policies
• Business characteristics such as your time in business, demonstrated success, and cash flow
• Whether you can put up large amounts of collateral
• Your specific credit issues (amounts owed, late payments, bankruptcies, etc.)
  

Because multiple factors play into how a lender assesses risk, there’s not a one-size-fits-all list of things to aim for. A business that’s lacking in creditworthiness may make up for it with a proven business plan and valuable collateral to secure the loan. Lenders look at the full picture, not just a credit score.

Best SBA loan programs for borrowers with bad credit

If your business got off to a rocky start or you’ve made some missteps in the past, you’re not shut out of financing. In fact, lenders report that a business’s overall financial position is the main thing they look at, not credit history.  

Because the individual lenders (banks, neobanks, credit unions) set additional requirements, on top of general SBA loan requirements, for their institutions, you may do best by shopping around. Here are the general loan options available to help you get started.

SBA Microloan Program

This SBA loan program focuses on underserved communities and startups, which often face unique challenges in starting and keeping a business going. The minimum credit score for these loans is typically around 620. (Although, because lenders each set their own internal guidelines, this can vary slightly.)

The maximum amount businesses can borrow through the program is $50,000, making this a better option for improvements, working capital, supplies, or equipment. The loan funds cannot be used for paying off debt or purchasing real estate, and average around $13,000 per loan. Plan to demonstrate creditworthiness with a strong business plan and a willingness to work with a technical assistance partner to improve your chances of approval.

SBA 7(a) Loan

This loan is admittedly a bit more difficult for those with bad credit to access. If you can show business strength, your chances improve. Things lenders may use to offset a low credit score include:

• Strong collateral (property, equipment) that can be used to secure the value of the loan
• Solid business cash flow
• Demonstrated history of being successful in your business for multiple years
  

Established businesses may achieve better results than startups and those without a proven track record of profitability.

Key requirements to offset poor credit

The saying, “credit isn’t everything,” may be true when it comes to SBA loans, as long as you can show lenders your other business strengths. Any or all of the following can work in your favor and help a lender overcome objections to past late payments, bankruptcies, and defaults.

• Time in business, especially if longer than two years
• Consistent revenue, increasing month over month
• A positive cash flow, with few if any annual losses
• A well-prepared business plan that shows your goals, details for improving profits, and plans for expansion (if applicable)
• A detailed explanation of how you’ll use the funds and pay the loan back over time
• Collateral, such as property, or personal guarantees of how you will cover the value of the loan in the event of an unforeseen business decline
  

Lenders generally don’t want to see recent bankruptcies, tax liens, or defaults on federal loans. If you have these on your credit report from years ago, be prepared to show evidence of how you’ve overcome or changed course.

Tips to improve your SBA loan chances with bad credit

Your credit score is a constantly changing metric that can show a bank you’re responsible enough to take on new credit. Because it changes often, there are steps you can take to improve it for the near future, possibly in time for your next SBA loan application.

Actions to take include:

• Pay off existing debts, or pay down as much as you can in the short-term
• Check your business and personal credit reports, correcting any errors you find
• Build your business credit, which can be used if your personal credit is weak
• Partner with a business advisor or community lender, who may be more open to businesses in your situation
• Start with a small loan (such as a microloan) and borrow only what you need
• Consider short-term loans, which can be paid back quickly to build business credit
  

Alternative paths if SBA loans aren’t an option yet

If, despite your efforts, you’re still not in a position to qualify for an SBA loan, you may still have choices.

Secured business credit cards require you to put down a cash deposit or collateral to access a line of credit, but they do offer credit benefits and liquidity you can use to grow your business.

Revenue-based financing and invoice financing agreements are like mini loans from the companies you get supplies and inventory from; they allow you to pay for your products in increments, instead of all at once.

Even small, short-term loans can build your repayment history and put you on track for a better credit score. This newer score may put you in the driver’s seat for a better, bigger SBA loan down the road.  

Credit isn’t everything

Can you access a business loan with poor credit? In some cases, yes! But being informed is part of the hard work needed to be sure you get the best terms possible. Come prepared with all the documents and a proper strategy for how you’ll use the money.

While you may not get approved for the full amount of your loan request, 28% of small businesses still get partial funding. Finding a lender that frequently services businesses like yours can greatly improve your chances. Ready to get started? Let Lendio help you with this first step of the journey.

SBA loans don’t have official credit score requirements. But to obtain financing for your business, you’ll typically need a minimum credit score—it just might be set by the individual lender.

The SBA has also recently changed its funding requirements, so new borrowers should know what lenders expect before applying. That said, these are the typical credit-based criteria for different SBA loans, the importance of credit, and tips to improve your credit profile as a small business owner.

Why credit scores matter for SBA loans

SBA loans are business loans partially backed by the U.S. Small Business Administration. Some, like SBA 7(a) loans, are guaranteed between 50% and 90%. Even with this partial government guarantee, lenders still evaluate risk carefully.

Checking a borrower’s credit score and history is part of the standard underwriting process. A higher score generally means the individual is more likely to pay back what they owe. The better the credit, the lower the risk to the lender.

Lenders may check the borrower’s personal credit score when determining whether to offer financing. A FICO credit score of 670 or above is generally considered “good” credit.

Be aware that business credit, which is often used for larger or mature businesses, may also be used to evaluate your application. As of July 2025, the minimum FICO Small Business Scoring Service (SBSS) score for some SBA loans is 165. This is up from 155.

Minimum credit score requirements by SBA loan type (2025 estimates)

There are multiple types of financing available for your business, from the popular SBA 7(a) loan to Disaster loans. Credit score requirements for these loans depend on the lender and loan type, but these are the typical minimums.

SBA 7(a) Loan

SBA 7(a) loans offer small business owners a way to finance things like commercial real estate, furniture, and machinery. Funds can also be used to refinance business-related debt or as working capital.

Several types of SBA 7(a) loans exist, including:

• Standard 7(a) loans—these range from $350,001 to $5 million and have a 75% SBA guarantee
• 7(a) small loans—these cap out at $350,000 and have between a 75% and 85% guarantee, depending on the financed amount
• SBA Express loans—eligible business owners may take out up to $500,000 with a 50% guarantee

Other 7(a) loan programs include the Export Express Loan program, Export Working Capital Program, CAPLines program (a business line of credit), and the International Trade Loan program. Maximum amounts, percentage guarantees, and collateral requirements vary.

Typically, borrowers must have a minimum personal credit score of 650 to qualify for an SBA loan. The minimum SBSS score is 165.

SBA loans are more flexible with strong financials—that is, the ability to demonstrate steady, high business cash flow. Having collateral may also help offset a lower credit score.

SBA 504 Loan

An SBA 504 loan is one that’s jointly funded by a Certified Development Company (CDC) and a traditional lender. They cap out at $5.5 million, with some exceptions.

These loans are similar to the 7(a) program, but can be stricter if real estate is involved. Funds can only be used for specific purposes, such as purchasing land or new facilities.

In exchange for funds, the lender will place a first lien on the real estate property, while the SBA places a second lien on it. Sometimes, collateral is also required. Again, there are no preset credit score requirements, so shoot to have a score of 650 or above.

SBA Microloan

SBA microloans come in smaller amounts up to $50,000. They’re flexible in that business owners can use them for things like working capital, furniture, equipment, machinery, and inventory or supplies. However, they can’t be used for real estate or debt repayment.

It’s possible to get a microloan through a qualified nonprofit, community-based organization. Borrowers may qualify with a strong business plan, solid financials, mentoring, and a lower credit score of around 620.

Economic Injury Disaster Loans

The SBA’s disaster loans are geared toward small businesses that have suffered economic damages due to a declared disaster. Minimums vary but cap out at $2 million (when combined with a physical disaster loan). Exact amounts are based on the business’s financial needs in relation to the disaster.

While disaster loans have no specific credit score requirement, lenders may consider the borrower’s financials and overall credit. Collateral is required for loans exceeding $50,000.

What lenders look for — beyond the score

SBA loan requirements, including business loan credit score, can vary by lender. This is true even of SBA-backed programs.

Since every SBA loan program has its own criteria, it’s important to do your research. It also helps to have a strong overall financial and credit profile before applying.

Beyond that, these are some things lenders often look for besides your credit score:

• Overall credit profile, including payment history, credit utilization, and length of credit history
• Recent delinquencies or bankruptcies on your credit report
• Overall financial health of your business (including cash flow and debts)
• Solid business plan and clear financial statements
• Owner’s invested equity in the business
• Collateral (such as business real estate)

Having a down payment could also help you qualify. Know that SBA loans generally have lower down payment requirements than other forms of business financing.

Applying for a larger loan may also require a larger down payment, stronger financials, or higher credit score. It all depends on the lender and program.

How to improve your credit score before applying

With SBA loans, credit score matters. If yours needs some work, here are some tips to improve your credit score.

• Check your personal and business credit reports—and dispute any errors bringing down your score
• Pay down outstanding balances—personal and business
• Avoid new credit inquiries before applying—a hard inquiry can cause your score to drop by up to five points
• Work with a credit advisor if needed

Try to wait until your credit score reaches at least 650 before applying for an SBA loan. This will increase your approval odds—but remember, some lenders will still work with borrowers with a lower score.

Can you still qualify with a low credit score?

It’s possible to get a business loan even with a lower credit score. SBA lenders may work with borrowers who have:

• Strong cash flow (boost your business revenue!)
• Valuable collateral or a large down payment
• Been in business for several years or more
• A co-signer or guarantor
• Significant business equity

If you don’t qualify, consider an alternative SBA lender or microloan instead.

Credit is a key part of the equation

When it comes to getting an SBA loan, your credit score is important. But it’s not the only factor. Having a business with strong financials, proven longevity, and a solid plan could help you qualify for financing.

Review your business (and personal) financials and credit holistically. Taking the time to prepare can boost your approval odds and maximize your overall success.

Ready to get started? Apply now with Lendio and get funded in as little as 24 hours.

Getting approved for an SBA loan is a big step and a huge relief for many small business owners. But approval doesn’t mean funds in hand. This guide breaks down what happens next, so you can stay ahead of the process and avoid delays.

If your SBA loan was just approved, take a moment to celebrate. You’ve passed the biggest hurdle in the process! But before those funds land in your account, you’ll need to complete one more important stage. SBA loan closing.

This stage is often misunderstood, especially by first-time borrowers. That’s why we believe it’s essential to provide small business owners with a clear understanding of what comes next.

So, in this guide, we’ll walk you through what happens after approval, what documents you'll need, and how long closing typically takes, so you can stay ahead and put your capital to work without delay.

Why SBA loans take time to close

SBA loans take longer to close than traditional loans because there’s more red tape. Since they’re partially backed by the government, lenders have to check every box (collateral, permits, compliance paperwork, etc.) before the funds are released.

Borrowers can support this process by staying proactive and organized, for example, by responding promptly and keeping documents up to date. This goes a long way towards avoiding unnecessary delays and keeps closing on track.

Please read our guide on what an SBA loan is to better understand how they work and why the closing process is more involved.

What happens after SBA loan approval?

After your SBA loan is approved, your lender will send over a Loan Commitment Letter. This lays out what needs to happen before closing can move forward, and usually covers:

• How much you’re approved to borrow, and at what rate
• The repayment plan you’ve agreed to
• Any collateral you’ll need to provide
• Additional requirements (e.g., insurance, permits, or licenses) that must be in place before funding

It’s worth going through this letter carefully. If anything looks off or unclear, ask your lender now rather than later. A quick conversation upfront can save you time and frustration down the line.

If you want to get a head start on your prep, read our guide on how business loans and taxes work to make sure you’re set up for tax season.

Key steps in the SBA loan closing process

The SBA closing process is pretty straightforward once you know what’s coming. While the exact steps vary depending on your loan and business, most borrowers go through a similar checklist:

1. Document collection and verification

Lenders often ask for fresh copies of key paperwork, even if you already submitted them earlier. This is because they need to confirm that your business still matches the terms of your approved loan.

In light of that, expect to resend things like:

• Personal and business financial statements
• Business licenses, permits, and insurance certificates
• Proof of business structure (such as Articles of Incorporation or an LLC Operating Agreement)
• Lease agreements or property-related documents (if real estate is part of the loan)

If anything is outdated or missing, your lender may pause the process. So, gathering these items in advance helps keep things on track.

2. SBA-specific documentation

After reviewing your paperwork, your lender will move on to the final SBA forms:

SBA loan authorization: This spells out the terms, things like the loan amount, interest rate, repayment schedule, collateral, and any extra conditions attached.

Proof of flood insurance (if applicable): If your loan involves real estate in a designated flood zone, flood insurance must be in place before closing. The policy must meet federal standards and name your lender (or the SBA) as the loss payee.

Environmental due diligence: If the loan includes commercial real estate (especially properties with past or current uses that may pose environmental risks), your lender may require a Phase I Environmental Site Assessment to identify any concerns.

Certification of use of proceeds (SBA form 1050): This form is required for all 7(a) loan disbursements. You and your lender must complete it at closing to confirm how funds will be used, consistent with the loan authorization. Supporting documentation (like invoices or wire confirmations) may also be required.

Other SBA forms and certifications: Depending on your loan type and business situation, you may be asked to complete additional documents, such as:

• SBA Form 159 (if you paid a broker or agent)
• IRS Form 4506-C (to verify business tax returns)
• Hazard insurance documentation (for collateral)
• Borrower certifications confirming no material changes since loan approval.

3. Legal and compliance requirements

Once the SBA-specific paperwork is out of the way, your lender will move on to the legal checks to confirm that your business is on solid legal ground and that everything meets SBA program rules.

You may be asked to:

• Sign legal documents that reflect the final loan terms
• Show that you’ve invested some of your own money into the business
• Provide proof that your location complies with zoning laws or environmental rules
• Back the loan with a personal guarantee or collateral

These steps are all about protecting both you and your lender while keeping everything above board.

Since SBA loans often require personal guarantees or assets as collateral, it’s worth understanding what happens if you default on an SBA loan and how to protect yourself.

4. Lender due diligence and final review

Right before closing, your lender will go over the details one last time to make sure everything lines up before funds are released. That could mean:

• Taking a second look at the title report, especially if real estate is involved
• Making sure all the collateral paperwork is in the file
• Following up with any lingering questions from underwriting

It’s routine, but important because it’s how lenders protect both sides before the loan goes live.

5. Signing the closing documents

This is the part where everything becomes official. You’ll go over the final loan agreement and sign documents like the promissory note, personal guarantee, and security agreement.

However, if real estate is part of your loan, there’s usually extra paperwork involved, like a deed of trust or lien filings. Some of those documents may need to be notarized. But don't worry, your lender will tell you what’s needed and when. These days, many lenders offer digital signing options to make things easier

6. Disbursement of funds

After you’ve signed all the paperwork and your lender has done a final review, the funds can be released.

How that happens depends on your loan and what it’s being used for:

Lump sum: For some loans, such as those primarily for working capital or refinancing existing debt, the full loan amount may be disbursed all at once directly into your business bank account.

In stages (draws): For projects involving construction, major renovations, or phased equipment purchases, funds are typically released in stages. This "draw" process allows the lender to monitor project progress and verify that funds are used appropriately at each phase.

Direct to third parties: Sometimes, the funds don’t go straight into your account. Depending on your loan terms, the lender might send the money directly to vendors like equipment suppliers or business sellers, or place it in an escrow account managed by a title company. This helps make sure the money gets used exactly as approved.

The typical timeline for fund disbursement is generally within 7–21 business days after the loan closing documents are signed. While some lenders, particularly those with highly streamlined or digital processes, may be able to release funds faster, it's prudent to anticipate this timeframe.

Get ready to put your capital to work

Once you close, the hard part is behind you. Now it’s time to focus on growth. It doesn't matter whether you’re purchasing new equipment, expanding to a second location, or managing seasonal cash flow; your loan is likely the key to moving your business forward.

Interested in a SBA loan? Lendio stays in your corner every step of the way, offering tools, expert guidance, and support when it matters most. If you're planning your next big move, our team is ready to help you make it happen. Start your SBA loan application today.