SBA loans are unwritten by the bank backing the loan - the SBA only guarantees the loan to the bank. These loans are good for new businesses or business owners who cannot put down the normal 20% or more in equity.
All banks have their own policies - regarding lending limits, minimum credit scores and collateral. Just know that when it comes to credit and collateral, the bigger the better.
For most lenders, the minimun amount depends on the collateral value - they will not lend more than the collateral is worth. Further, they will not lend more than you can service. If you monthly payment is $1,000 for the amount you want but you can only show your business earning $800 per month in free cash flow to service the debt - you will be declined or have your amount reduced.
The SBA does have limits on the amount they will guarantee - visit the SBA's website and click the financing tab to get an idea of what they are willing to guarantee.
Credit score should be over 700 FICO - although some lenders will go around 650 to 680 if the rest of the business is solid - meaning great cash flow and collateral.
Regarding collateral - banks or any lender does not want your collateral - they are in the lending business not th collateral business. If they take your collateral, it costs them. They have to foreclose, hold and liquidate the collateral - which all costs money. Thus, most banks will only use collateral that is easily saleable - not unique or single purpose. Take a car wash - a car wash can only be a car wash where a warehouse building can be used by multiple businesses in multiple industries.
Your best bet is to just start talking with lenders - ask them what their individual standards are - then go from there.
Business Money Today
I had tried 2 years ago for loans but my FICO was reading little or no credit, and unfortunately my parents never taught me what having good credit was about and my husband and I had a firm belief if you can pay for it by cash you don't need it at all. Also I was getting ready to purchase my first home to ad to my credit score but the employer I had after working for them 6 1/2 years decided that they needed to wrongfully terminate me I did however in the last 6 1/2 years paid for two vehicles which should account for something. Then the other part of the dilemma was no one was lending at that point. I even tried SCORE.
I am a Professional Pet Groomer with over 20 years experience.
With that in mind I took my tax returns to open the business with $7,000.00. I have some very understanding clients who know I'm operating on a dime. Since I opened the business my first year I doubled what I originally spent for opening. The second year I've already double what I did from year prior. So I'm on the right track. I've done this completely on my own with no employee help. Now next year I want to open up as an Instruction School which I can earn about $3,000.00 per student. But what I need to do is find a nice loan so I can get caught up with my rent (which by the way I have very wonderful landlords who have been very patient with me since I opened and have helped me out), I would also like to get two ad companies who literally took me to the cleaners with no results from the marketing campaigns, switch some carpeting to tile, get extra heavy equipment of tables, tubs and dryers, and bring in electrician. So total loan of needing $12,000.00.
Do you have any suggestions for me?
The SBA does not have specific criteria like you are asking about. In fact, with the exception of disaster relief loans, the SBA doesn't underwrite business loans. If you want to get an idea of what the criteria are for each lender, you may want to consider going to a commercial loan broker who can do the legwork for you, or you can call around to the large SBA lenders. If you google the phrase top "SBA lenders", you'll find a slew of banks. Wells Fargo, US Bank, Chase are just a few.
It doesn't matter what the SBA states in regards to loan criteria - banks are ONLY going to use your personal credit score to make a decision. Even though they will tell you they looked at your whole business profile, it comes down to 1 single score, period.
I would like to know the requirements in this economy for acquiring a SBA Loan.
If anyone would like to reply I would greatly welcome it. If you do SBA Loans are you seeing an influx of them or a decline?
What I'm looking for is:
1. Minimum amount.
2. Lowest FICO Score accepted.
3. How much collateral is needed?
4. What kind of collateral is acceptable?
If there is more need I would be grateful for the provided info.