The most basic SBA loan requirement is that you must have a U.S.-based, for-profit business in an eligible industry. Your business needs to be officially registered and operating legally. Nonprofit businesses aren’t eligible for SBA loans.
The basic qualifications include the following:
- You must have invested equity in the business
- You must have used other funding sources before seeking an SBA Express loan
- You must demonstrate that reasonable financing is not available from other funding sources
- Credit score above 680
- DSCR (debt service coverage ratio) of 1.1 or higher
- Profitable business
- You cannot have other delinquent loans with the government
The following industries are considered not eligible:
- Businesses primarily engaged in lending
- Businesses primarily engaged in political or lobbying efforts
- Life insurance companies
- Businesses making most of their revenue from gambling activities
- Speculative businesses (e.g. medical research, shopping center developer)
- Most passive income businesses (e.g. flea market, shopping center)
For a complete list, you can view the SBA’s eligibility questionnaire. On the top of the SBA’s requirements, lenders may have their own list of eligible and ineligible industries.
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