Every business needs capital to operate. Working capital is the financial operating liquidity that enables a business to pay its expenses and debts, acquire business opportunities, and deal with seasonal fund fluctuations. Working capital loans are often used to secure the cash needed to operate and SBA loans are a primary source of working capital lending for small businesses and startups. In every case, good money management is a central factor in business success. As author Idowu Koyenikan stated, “When money realizes that it is in good hands, it wants to stay and multiply in those hands.”

What are SBA Loan Requirements?

There are two primary types of SBA loans that are generally available for small businesses: an SBA 7(a) loan which offers working capital up to $5 million, and an SBA Microloan which offers working capital up to $50,000.

The SBA 7(a) loan can be used for working capital, refinancing debt, purchasing equipment, real estate, or purchasing a business. These are popular loans because they offer low interest rates and long repayment terms.

To qualify for one of the SBA loans, an applicant will need to meet these requirements:

  • Operate a for-profit business. 
  • Operate in the United States or one of its territories and be owned by U.S. citizens. 
  • The owner cannot have had recent bankruptcies, foreclosures, or tax liens. 
  • A minimum credit score of 640 (a score of 680 increases approval likelihood.) 
  • Be able to back the loan with sufficient capital.  

SBA Loan Mistakes

Avoid these mistakes to be approved for SBA loans:

  • Not knowing how much money is needed or for what purpose. 
  • Not including an itemized list of collateral. 
  • Not cleaning up your credit score. 
  • Not having the adequate cash flow to pay back the loan.  

Seek Expert Funding and SBA Loans Assistance

Contact Painted Horse Financial to obtain the right commercial finance option for your business today. We provide financing for every business with asset-based, commercial real estate, business financing, and working capital options to help you grow.