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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.

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.

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.

Update: BayFirst announced they would be discontinuing the Bolt loan program on August 4, 2025. Read on for alternatives to the program.

You can’t always anticipate your business needs. So, when a new opportunity arises, and you need funding fast, it’s good to know all of your available options. One popular option was until recently the SBA Bolt loan. It offered flexible business financing in a more streamlined way than what you may expect from SBA funding. These loans were built for speed and could be your fast-track option for small business financing when minutes really matter.

What is an SBA Bolt loan?

The SBA Bolt was a type of SBA 7(a) loan that limited borrowers to no more than $150,000 but had fewer business loan requirements to meet when applying. It had a faster approval process, too, so was ideal for those in a crunch to get funding for a time-sensitive need.

The Bolt loan was an offering issued by CreditBench, the small-business lending division of BayFirst. However, on August 4, 2025, BayFirst announced that they would be discontinuing the Bolt loan program.

Was the Bolt loan an SBA loan?

Yes and no. The SBA loan program doesn’t offer an official Bolt loan program. Instead, the “Bolt” loan designation was created by BayFirst Financial to market its expedited small-dollar SBA 7(a) loans. So, the Bolt loan was an SBA 7(a) loan, but the name for this segment of small-dollar loans was created by BayFirst.

Key features of the SBA Bolt loan for small businesses

SBA Bolt loans weren’t the only fast, small business loans on the market, but they did stand out for a few reasons.

1. Loan amounts were significant enough to make a difference in a business, but not so large that they needed extensive documentation or collateral.
2. Processing time was just days, so businesses received funding much faster than the weeks or even months of traditional business loans.
3. The streamlined application process required much less paperwork. Most businesses would have the documentation they need on hand (or could access it quickly).
4. The shorter 10-year repayment period helped businesses plan for the near future and not worry about being saddled with decades of additional debt.
5. Competitive interest rates made the SBA Bolt loans a more stable option compared to “fast cash” alternatives.

Application requirements at a glance

While the SBA Bolt loans may have been quicker to get, they still had minimum requirements to meet. These loans were for legitimate, proven businesses that could demonstrate creditworthiness.

Businesses had to:

• Be in an approved industry for SBA loans (no life insurance, lobbying, or primarily gambling businesses, among others)
• Be U.S.-based
• Meet the SBA’s standards for “small”
• Operate for profit
• Have 2 years of demonstrated operations (some small startups may also qualify)
• Show proof of revenue and ability to repay
• Be unable to get financing on reasonable terms from other sources

Alternatives to SBA Bolt Loan

Now that the Bolt loan program has been discontinued, you might be wondering what your other options are. Here’s a comparison of the SBA Bolt Loan against other small-dollar SBA loan programs.

SBA Bolt Loan vs. SBA Express Loan

Closest in speed and simplicity to the SBA bolt loan would be the SBA Express loan, a small-dollar SBA loan meant to eliminate excessive paperwork and decisioning. Of other SBA loan program offerings, the SBA Express loan reduces the number of forms and procedures required, and allows lenders to use more of their own loan analysis, procedures and documentation than other SBA loans.

SBA Bolt loans vs. other small business loan options

SBA Bolt loans were fast, flexible, and available to businesses that may have been shut out of other financing opportunities. Now that they have been discontinued, take a look at some other options available. Here’s how they compared to common business funding programs used by companies today:

• Traditional SBA 7(a) loans: Offer much larger amounts (up to $5 million) and broader use cases, but the approval and funding take much longer (weeks or more). Paperwork and documentation needs can be extensive.
• Term loans: Offer a lump sum that’s repaid over a set period, usually with a customizable term, and for larger amounts. Approval process can take longer, require physical collateral, and may not be guaranteed by the SBA or partner banks.
• Lines of credit: Offer flexible funding to borrow from again and again, instead of the single, one-time lump payout of a Bolt loan. Comes with a higher interest rate in most cases and can be harder for the average small business to qualify for. ‍
• Revenue-based financing: Provides upfront cash that is rapidly repaid through a percentage of daily sales. Comes with a higher interest rate and lacks a fixed repayment structure that helps businesses budget better.

Many SBA loan portals let you shop around to see what rates, terms, and limits you qualify for. Don’t be afraid to ask questions about these various lender offers so you know how the loan process will look and to ensure you get the best service – and deal!

Lendio makes a great first step in the process, showing you the loans you’re likely to qualify for, rates available, and the loan terms you can expect before you fill out all the paperwork.

SBA loans are one of the most popular ways for small business owners to secure affordable financing. Features like low interest rates and extended SBA loan repayment terms make funding more accessible, but they also create high demand, so competition for loan approval can be steep.

The loan application requires careful attention to detail. Accuracy is critical, and you’ll need to follow a clear set of steps. Otherwise, a single mistake could derail the process, costing you time and potentially leading to a loan denial.

Understanding exactly how to get an SBA loan approved and the top application mistakes to avoid could be the difference between securing the funds you need and starting over from scratch. Here’s what you need to know.

SBA loan applications require extra attention.

The SBA loan application process is more detailed than many expect. SBA financing has stricter requirements, leading to more paperwork and additional layers of review.

It’s important to note that the SBA does not issue loans directly. Instead, it partners with approved banks, credit unions, and online lenders that follow SBA guidelines for evaluating and processing applications.

The process typically starts with gathering financial documents, completing SBA-specific forms, and outlining a clear plan for how you’ll use the funds. Then, the lenders are required to verify every detail of your application and make sure your business is a solid credit risk. To pass this examination, it’s important to submit a complete, accurate, and well-documented application.

Common SBA loan application mistakes to avoid.

Even businesses with solid backgrounds and strong credit profiles can sometimes get tripped up during the SBA loan application process. Here’s a look at some of the most common mistakes business owners make, and how to avoid them.

Incomplete or disorganized documentation.

Lenders need a full picture of your business before they can approve your loan, so you’ll need to provide every requested piece of documentation. This includes:

• SBA Form 1919
• Recent tax returns
• Financial statements
• Your business plan
• A clear breakdown of how you’ll use the funds

Failing to provide these items can slow down your approval and could stop it altogether. Avoid this common mistake by creating a checklist and reviewing everything with a trusted advisor before hitting submit.

Underestimating the importance of credit.

When you’re applying for a business loan, your personal credit doesn’t matter—right? Actually, when you’re dealing with SBA loans, that’s not the case. Your personal credit history helps lenders evaluate risk, so that’s typically one of the first things they’ll look at. Make sure you’re prepared by reviewing your most recent credit report well ahead of time. This can help you identify errors or other issues that need to be addressed before you apply.

Overstating financial projections or revenue.

It’s tempting to present big growth numbers, especially when you’re excited about the direction your business is headed. But if your projections aren’t based on verifiable data or market trends, they can raise red flags. Lenders want to see realistic, well-supported forecasts, so be honest about your revenue. Back up your projections by explaining your assumptions and showing that while your goals are ambitious, they’re also grounded in reality.

Lack of clear loan purpose.

SBA lenders want to know exactly where the money is going and how it will help your business grow or stabilize, so vague or inconsistent explanations for how you’ll use the funds could raise more red flags.

The more specific your answers, the better. Whether you’re planning to use the funds for payroll, equipment, or working capital, make sure you can show that each dollar is tied to a clear business goal. This shows that you’ve given it plenty of thought and will use the money to make smart business moves.

Ignoring debt-to-income or debt-service coverage ratios.

Make sure you’re realistic about how much debt your business can afford to repay. Before approving a loan, SBA lenders look closely at your debt-to-income (DTI) and debt-service coverage ratio (DSCR). These calculations help assess your ability to handle an additional loan. If the numbers don’t make sense, they may deny your application, even if everything else checks out.

Before submitting your SBA loan application, carefully run the numbers and make sure the amount you’re requesting aligns with what your business can reasonably support.

Not understanding the SBA loan type you’re applying for.

Applying for the wrong type of SBA loan can delay your application or lead to a mismatch in funding. For example, an SBA 7(a) loan may work well for general business needs, while a 504 loan is better suited for purchasing real estate or equipment. And if your business is fairly new and you meet the requirements, you may benefit from applying for an SBA Microloan instead.  

To avoid this mistake, take the time to research your options or meet with a loan advisor who can help you choose the program that best fits your business goals.

Skipping the business plan (or submitting a weak one).

A strong business plan shows lenders where your business is headed and how you’ll get there. Generic, outdated, or incomplete plans can lead lenders to believe you haven’t fully thought through your strategy or aren’t committed to the long-term success of your business.

Creating a robust business plan is well worth the time and effort it requires. Make sure your plan includes your current financials, clear growth strategies, and a thorough competitive analysis. Demonstrating that your business plan aligns with the loan request helps lenders see that you’re thinking strategically and ready to use the funds with purpose.

Strengthen your SBA loan application.

Once you’ve sidestepped the most common SBA application mistakes, there are a few additional things you can do to make sure your submission is as strong and lender-ready as possible. Taking these steps can help speed up the process and may boost your chances of approval:

• Stay organized: Keep all of your paperwork in a digital folder so it’s easy to access and update
• Work with a professional: An accountant or small business advisor may help spot missteps before you submit
• Be transparent: Most challenges will come up during the review process anyway, so it’s better to be upfront. Let lenders know what you’ve overcome and how your business is stronger because of it
• Double check everything: Review the SBA’s official borrower checklist and lender guidelines before submitting your application

A complete, well-prepared application shows lenders you’re serious, and may make it easier for them to say yes.

Use the SBA application process to strengthen your business.

SBA loan application mistakes are fairly common. Even experienced business owners can miss a step, but with the right preparation, most errors are avoidable.

The application process is about more than completing paperwork. It’s an opportunity to polish your business plan, get a clear picture of your financials, and build confidence in exactly what you’ll do with the funds. Not only will this level of clarity help improve your chances of approval, but it can also help you run a more successful business.

Take the next step toward reaching your business goals. Explore SBA loan options with Lendio and check your eligibility today.