SBA Loan Requirements
There is no single list of SBA loan requirements. There are two — the rules the Small Business Administration actually sets, and the standards each lender adds on top. Most of the numbers you have read online belong to the second list, presented as though they belonged to the first.
This page separates them. Every SBA rule below is cited to the regulation, Standard Operating Procedure or policy notice it comes from, with the date it took effect.
What the SBA actually requires
To be eligible for a 7(a) loan, a business must:
- be an operating business
- operate for profit
- be located in the United States
- be small under SBA's size standards
- not be a type of ineligible business
- be unable to get the credit elsewhere on reasonable terms
- be creditworthy, with a reasonable ability to repay
That is the list. Seven items — and not one of them is a credit score, a revenue figure or a number of years in business.
Source: U.S. Small Business Administration, 7(a) loan program eligibility.
SBA rule, or lender rule?
Both are real. Both can stop your application. But they behave completely differently — and knowing which is which tells you whether to fix the problem or find a different lender.
| Factor | Set by SBA? | Lender-dependent? | When it matters | What to prepare |
|---|---|---|---|---|
| Personal credit score | No — SBA publishes no minimum | Yes — entirely | Every application | Know your score before you apply; be ready to explain anything adverse |
| Time in business | No minimum — but SBA defines a "start-up" as one year or less, which triggers an equity requirement | Yes | Every application; heavily under two years | Formation documents and the full operating history you do have |
| Debt service coverage | Yes — 1.10:1 on 7(a) Small Loans ($350,000 or less) | Yes, above the floor | Every application | Year-end financials and a current interim P&L |
| Collateral | Partly — none required at $50,000 or less; defined rules above that | Yes | Loans above $50,000 | A list of business fixed assets, and honest figures on any personal real estate |
| Personal guarantee | Yes — every 20%+ owner, no exceptions | Lender may require more | Every application | A personal financial statement for each guarantor |
| Down payment / equity | Yes — but only for certain transactions | Yes, above the minimum | Start-ups, acquisitions, 504 projects | Proof of where the money came from |
| Owner citizenship | Yes — a hard gate | No | Every application | Documentation for every direct and indirect owner |
| Business size | Yes | No | Every application | Your NAICS code; revenue or headcount |
| Type of business | Yes | No | Every application | An honest description of how you actually earn revenue |
| Credit available elsewhere | Yes | Lender certifies it | Every application | Nothing — this is the lender's certification, not your paperwork |
Personal credit score
Time in business
Debt service coverage
Collateral
Personal guarantee
Down payment / equity
Owner citizenship
Business size
Type of business
Credit available elsewhere
Where the third column says "entirely," a decline is not the end of the road — it is information about that lender. Where the second column says "Yes," it is the rule everywhere.
What SBA eligibility actually means
An operating business, operating for profit
The business must already be running, or be starting up with the intent to run. Non-profits are not eligible, though a for-profit subsidiary may be. Passive businesses — holding assets rather than using them — are excluded, with narrow exceptions. See the full list of ineligible business types.
Located in the United States
The business must operate in the U.S. or its territories.
Small, by SBA's definition
Two different tests, and you only need to pass one. See how "small" is measured.
Not an ineligible type of business
A longer and more specific list than most borrowers expect, and it catches business models that sound perfectly ordinary. Read it before you assume you are fine.
Unable to get the credit elsewhere — yes, really
If your business is strong enough to get a conventional loan on reasonable terms, it is not eligible for an SBA loan.
The Standard Operating Procedure puts it directly:
"If the Applicant's cash flow and collateral, including the adequacy of any third party guaranty, would cause the Applicant's loan to meet conventional credit standards of the SBA Lender or Third Party Lender, the Project is not eligible for an SBA Loan."
The lender must certify this and justify it in its credit memorandum, testing whether the money is reasonably available from conventional lenders or from the personal liquidity of owners holding 20% or more, their spouses and their minor children. SBA allows those owners to keep reasonable reserves for future medical costs, education and retirement, and allows the business reasonable working capital.
What this does not mean: you do not have to collect rejection letters. There is no requirement that you apply anywhere else first. It is the lender's certification, not your paperwork.
What it does mean: unusually large personal cash reserves work against SBA eligibility, not for it. That is the opposite of how most lending works, and almost nobody explains it.
Creditworthy, with reasonable ability to repay
The words SBA uses are "creditworthy" and "reasonable assurance of repayment." No number attaches to either. What that means for your credit score.
Sources: 15 U.S.C. § 636(a)(1)(A); 13 CFR § 120.101; SOP 50 10 8, Section A, Ch. 1, Para. H; sba.gov 7(a) program eligibility.
How SBA decides your business is "small"
There are two ways to qualify, and you only need one.
The industry standard
SBA publishes a size standard for every industry, keyed to your NAICS code — expressed either as average annual receipts or as number of employees. The table is at 13 CFR § 121.201.
The alternative size standard
If your industry's standard does not work for you, you can qualify instead when both of these are true, counting the business and its affiliates together:
Tangible net worth of $20 million or less, and average net income after federal income taxes of $6.5 million or less for the two full fiscal years before the application, excluding carry-over losses.
Three details that catch people out
- Affiliates count. Size is measured across the applicant and its affiliates, not the applying entity alone.
- Size is fixed at a moment in time — the date the application is accepted for processing, or for a delegated lender, the date the lender approves it. Growing afterwards does not disqualify you.
- Buying a business? Both sizes are combined to test the standard.
One thing works in your favour: size standards increase by 25% when all of the financing will be used in a labor surplus area designated by the Department of Labor.
Sources: 13 CFR §§ 121.104, 121.201, 121.301, 121.302; SOP 50 10 8, Section A, Ch. 1.
What credit score do you need for an SBA loan?
SBA does not set one. There is no minimum personal FICO score in the SBA's eligibility rules for 7(a) or 504. The requirement is that an applicant be "credit worthy" and demonstrate "a reasonable ability to repay." No number is published because no number exists.
In practice, most SBA lenders look for a personal score somewhere in the high 600s — figures in the 650–700 range are common. That is a real hurdle and we are not going to pretend otherwise. But it is a lender's standard, not an SBA rule, and it varies from lender to lender.
Why you see so many different "minimum scores" online
- Lender standards get reported as SBA rules. A page says "you need a 680 for an SBA loan." What it means is that the lender it spoke to wants a 680.
- Pages have not caught up with a rule change. Until 1 March 2026, SBA screened 7(a) Small Loan applications using the FICO® Small Business Scoring Service (SBSS) score — a business score, not a personal one. That screen was discontinued. SBA's notice states that from that date "7(a) Small loan applications will no longer receive an SBSS Score and SBA will no longer screen 7(a) Small loan applications using the SBSS Score," and the acronym was struck from the SOP's own glossary. Any page still quoting a required SBSS number — 140, 155, 165 — is describing a screen that no longer runs.
- Old content stays online. Some of the most confident numbers on the first page of search results come from articles written years ago and never revisited.
What replaced the SBSS screen
For 7(a) Small Loans, SBA now requires lenders to use "appropriate, prudent, and generally accepted industry credit analysis processes and procedures consistent with those used for the Lender's similarly-sized, non-SBA guaranteed commercial loans."
Lenders may still use a business credit scoring model their federal regulator permits — with one important limit: the model must not rely solely on consumer credit scores. And whatever the model says, the lender still has to write a credit memorandum analysing the credit history of the business, its Associates and its guarantors, explain why credit is not available elsewhere, and show a reasonable assurance of repayment.
SBA Express was not affected by this change and continues under its own rules.
So what should you actually do
Check your personal credit before you apply, because a lender will. If it is below the high 600s, an SBA loan is harder but not automatically closed — strength elsewhere, particularly cash flow, is what a credit memorandum is built on. And because the standard is set by the lender rather than by SBA, one lender's answer is not every lender's answer.
We are not publishing a Fundur minimum score. Requirements vary by financing provider, and quoting a single number would be exactly the mistake this page is about.
Sources: sba.gov 7(a) program eligibility; SBA Procedural Notice 5000-875701, published 16 January 2026, effective 1 March 2026.
Can the business repay? The 1.10 test
Credit score gets the attention. Cash flow gets the decision. For 7(a) Small Loans — $350,000 or less — SBA sets a real, published minimum: the debt service coverage ratio "must be equal to or greater than 1.1:1 on a historical and/or projected cash flow basis."
How SBA calculates it
SBA defines both halves of the fraction, so you can work it out yourself:
Debt service coverage = Operating cash flow ÷ Debt service
- Operating cash flow
- EBITDA — earnings before interest, taxes, depreciation and amortisation.
- Debt service
- The future required principal and interest payments on all business debt — including the new SBA loan.
That last clause is the one people miss. You are not measured on how you service your current debt. You are measured on how you would service your current debt plus the loan you are asking for.
A worked example
A business with $180,000 of EBITDA
| Operating cash flow (EBITDA) | $180,000 |
| Existing annual debt service | $60,000 |
| Annual payments on the new SBA loan | $85,000 |
| Total debt service after the new loan | $145,000 |
| Coverage: $180,000 ÷ $145,000 | 1.24 |
That clears the 1.10 minimum with room. Had the new loan cost $110,000 a year, coverage would be $180,000 ÷ $170,000 = 1.06 — below the floor, and the request would need to shrink, lengthen, or wait. Illustrative only; your figures, and your lender's adjustments to them, will differ.
Where lenders go beyond the rule
1.10 is a floor, not a target. Many lenders want more before they are comfortable, and 1.15 or 1.25 are common internal standards. Those are underwriting preferences. 1.10 is the rule.
Lenders will also want the two most recent months of activity on your main business account, specifically to confirm that every debt has been counted.
Buying a business? Different numbers apply. Applications receiving an SBA loan number on or before 30 September 2026 use the rules on this page.
From 1 October 2026, SOP 50 10 8.1 sets separate coverage standards for change-of-ownership transactions: 1.25:1 for a first-time acquisition, an owner buyout, or an ESOP/cooperative purchase, and 1.15:1 for a business expansion — measured on the last fiscal year-end or a two-year average.
Sources: SBA Procedural Notice 5000-875701, effective 1 March 2026; SOP 50 10 8.1, Section B Ch. 2 and Appendix 15, effective 1 October 2026.
How much do you need to put in?
For most 7(a) loans: nothing. There is no general SBA down-payment requirement.
The widely repeated "you need 10%" and "you need 20%" are not universal rules — they are specific rules attached to specific kinds of transactions, generalised into something they were never meant to be. Equity injection is triggered by what you are doing with the money, not by the fact that it is an SBA loan.
When SBA requires an injection
10%
SBA defines a start-up, for this purpose, as a business "in operation (i.e., generating revenue from intended operations) for 1 year or less."
Every 7(a) loan to a start-up requires at least 10% of total project cost — all costs required to become operational, whatever the source of the funds. Loans approved more than 90 days apart count as separate projects.
10%
A change of ownership resulting in a new owner requires at least 10% of total project costs.
Seller financing can help, but only within a limit: seller debt counts toward your injection only if it is on full standby for the life of the SBA loan, and even then only up to half of the required injection.
None
An ESOP acquiring a controlling interest — 51% or more — of the employer business is not subject to the equity injection requirement.
For 504 loans, the tiers are different
The 504 program works differently: the borrower makes a contribution to the project, and the amount depends on what is being financed and how new the business is.
| Situation | Minimum contribution |
|---|---|
| Standard project — and it may be borrowed, if subordinate to the third-party loan and the debenture | 10% |
| New business | 15% |
| Limited or special-purpose property | 15% |
| New business and special-purpose property | 20% |
"Special purpose" is a defined list, not a judgement call
SBA publishes examples of limited or special-purpose property. The list is not exhaustive, and SBA may determine that other properties qualify. It includes:
- Hotels, motels and other lodging; marinas; recreational facilities including bowling alleys, golf courses, swimming pools, tennis clubs, sports arenas, amusement parks
- Gas stations; car washes; oil-and-lube, brake or transmission centres with pits or in-ground lifts
- Hospitals, surgery centres, urgent-care and other medical facilities; nursing homes and assisted-living facilities
- Funeral homes with crematoriums; cemeteries
- Cold-storage facilities where more than half the square footage is equipped for refrigeration; farms including livestock and dairy facilities; wineries
- Theatres and auditoriums; dormitories; railroads; mines; quarries including gravel pits; oil wells; sanitary landfills
If you already own land, buildings or equipment that form part of the project, that equity can count toward your contribution.
Buying a business? The rules are restructured. SOP 50 10 8.1 sorts change-of-ownership transactions into four categories. The 10% minimum stays, but its flexibility changes:
- For a first-time acquisition, the injection cannot be reduced or eliminated at all.
- For a business expansion or an owner buyout, a lender may reduce or waive it where the borrower has sufficient liquidity and working capital to sustain operations afterwards.
A "business expansion" is newly defined as an existing business — operating at least two full fiscal years under its current ownership — buying 100% of another business in the same four-digit NAICS industry group.
Sources: SOP 50 10 8, Section B Ch. 2 Para. C.2.a and Section C Ch. 1; 13 CFR § 120.910; SOP 50 10 8.1, Appendix 15.
Can an SBA loan put your house at risk?
It can — but not in the way the question usually assumes, and not on every loan. Here is how it actually works.
Below $50,000, no collateral is required at all
SBA's rule is explicit: for 7(a) Small Loans of $50,000 or less, collateral is not required. The same floor applies to SBA Express. Lenders may still take collateral if their own policies call for it, but SBA does not make them.
If you have read that this threshold is $25,000, that figure is out of date — including in some widely cited sources. The current SOP sets it at $50,000.
Above $50,000, the loan is secured as far as it reasonably can be
The lender must take a first lien on whatever the loan proceeds are buying. Beyond that, it works toward securing the loan with your business's fixed assets — real estate and machinery and equipment — up to the amount of the loan.
The rule people quote, and the half they leave out
You will often see it written that SBA will not decline a loan for lack of collateral. That is true, and it is the most useful thing about the program:
"A loan request is not to be declined solely on the basis of inadequate collateral. In fact, one of the primary reasons Lenders use the SBA-guaranteed program is for those Applicants that demonstrate repayment ability but lack adequate collateral to repay the loan in full in the event of default."
The sentence that follows is the one that gets dropped:
"However, SBA does not permit its guaranty to be a substitute for available collateral."
Read together: not having enough collateral will not sink an otherwise sound loan — but you cannot decline to pledge collateral you actually have. The guaranty covers the gap; it does not replace what is on your balance sheet.
So when does personal real estate come into it?
When the business's own assets do not cover the loan, a lender may look to personal real estate to close the gap. Whether that happens depends on the size of the shortfall, what the business owns, and the lender's own lien policies.
Applications receiving an SBA loan number on or before that date are governed by SOP 50 10 8, which sets the general framework above and leaves the detail of lien practice largely to lenders working within it.
SOP 50 10 8.1 makes this considerably more specific — and, usefully, more predictable. Where there is a collateral shortfall, the lender must take available equity in personal real estate — residential and investment property — solely owned by co-borrowers, owners of 20% or more, and guarantors (excluding supplemental guarantors). But it also sets limits that work in the borrower's favour:
- a lien on personal real estate may be limited to the amount of the shortfall, and to 150% of the equity in that property;
- the lender is not required to take real estate at all where the equity is less than 25% of fair market value — and must document that from a source other than your personal financial statement;
- for the "fully secured" test, improved real estate is valued at no more than 85% of market value and unimproved land at no more than 50%.
One rule tightens: where 50% or more of the loan is for working capital, the lender must lien all fixed assets, real estate included, up to the point the loan is fully secured.
What to do about it
Work out, before you apply, what your business actually owns and roughly what it is worth. If there is a gap between that and the amount you want to borrow, that gap is where the conversation about personal assets will happen — and knowing its size in advance is far better than discovering it at underwriting.
Sources: SOP 50 10 8, Section B Ch. 2; SOP 50 10 8.1, collateral appendix; 13 CFR § 120.411.
Who has to sign personally
A personal guarantee is not collateral, and the two are decided separately. Collateral is a claim on a specific asset. A guarantee is a personal promise to repay the whole loan.
Every loan must be guaranteed by at least one individual or entity. From there:
The 20% rule
Any individual with direct or indirect ownership of 20% or more must provide an unlimited full guarantee. Not a partial one, not capped at their ownership share — the whole loan. Entities owning 20% or more must guarantee too.
If nobody owns 20% or more, at least one owner must still provide a full unconditional guarantee.
The spouse rule almost nobody mentions
Each spouse owning less than 20% must personally guarantee the loan in full when the combined interest of both spouses and their minor children reaches 20% or more.
So a married couple owning 15% each are individually below the threshold and jointly above it. Both guarantee.
A spouse who owns nothing at all is not a guarantor, but will be asked to sign collateral documents where property is jointly held — and that guarantee is limited to their interest in that property.
The six-month lookback
Restructuring ownership shortly before applying does not work. Anyone subject to the guarantee requirement six months before the application stays subject to it, even if their stake has since dropped below 20%.
Guarantees SBA can ask for beyond the rule
SBA, or a lender acting under delegated authority, may require a guarantee from someone with a minority stake or no ownership at all — typically a person the business genuinely depends on to operate. These are "supplemental guarantors."
Everyone who guarantees the loan will provide a personal financial statement, with supplemental guarantors the only exception.
Source: 13 CFR § 120.160(a); SOP 50 10 8, Section A, Ch. 5, Para. A — carried into SOP 50 10 8.1 unchanged.
Who is allowed to own the business
100% of all direct and indirect owners — and all SBA-required guarantors — must be U.S. Citizens or U.S. Nationals whose principal residence is in the United States, its territories or possessions.
All entity owners must also have been created, organised or incorporated in the United States or its territories. "Principal residence" is not left vague: SBA defines it by reference to IRS Publication 523.
This is the requirement most likely to be wrong on other pages, because the rule changed in 2026 and even SBA's own 400-page Standard Operating Procedure still contains the superseded version in its main text. The current rule comes from policy notices layered on top.
What changed
- Lawful Permanent Residents — green card holders — are no longer eligible to own any percentage of an applicant business. This includes both unconditional and conditional LPR status.
- The previous exception permitting up to 5% foreign ownership was rescinded.
Both took effect for loans approved on or after 1 March 2026.
Who is eligible
- U.S. citizens, including those born in Guam, Puerto Rico, the Northern Mariana Islands and the U.S. Virgin Islands.
- U.S. Nationals — people born in American Samoa or on Swains Island, who are U.S. Nationals rather than citizens. Eligible, with documentation of status.
- Naturalized citizens, who in SBA's own words are "not subject to any special restrictions or requirements."
Who is not
- Undocumented individuals; people granted asylum; refugees; visa holders and non-immigrant aliens; DACA recipients
- Anyone who is not a U.S. citizen or national
- Anyone — including a U.S. citizen — whose principal residence is outside the U.S., its territories or possessions
- Entities organised outside the U.S.
- Citizens of the People's Republic of China or the Hong Kong Special Administrative Region
- Lawful Permanent Residents
- Anyone on the OFAC sanctions list
Two rules that decide real cases
The six-month lookback. The business is ineligible if any direct or indirect owner was an Ineligible Person at any point from six months before the SBA loan number is issued — unless that person has completely divested beforehand.
The guarantee exception. There is one narrow opening. Where a limited or supplemental guarantee is required by the lender for its approval, or by SBA to support a pledge of jointly held collateral, an Ineligible Person may provide that limited guarantee — the only exclusion being undocumented individuals. In practice this is what allows a business owned entirely by eligible owners to proceed where a non-eligible spouse must sign because property is jointly held.
Sources: SBA Policy Notice 5000-876441 (published 2 February 2026) and SBA Procedural Notice 5000-876626 (published 11 February 2026), both effective 1 March 2026; 13 CFR § 120.100.
How requirements differ across SBA programs
"SBA loan" covers several programs, and several requirements people treat as universal are in fact tied to just one of them.
| 7(a) Small | Standard 7(a) | SBA Express | 504 | Microloan | |
|---|---|---|---|---|---|
| Size | $350,000 or less | Up to $5 million | Up to $500,000 | Project-based | Up to $50,000 |
| Debt service coverage | 1.10:1 SBA minimum | Lender analysis | Lender analysis | CDC analysis | Intermediary's own |
| Collateral floor | None required at $50,000 or less | Secured as far as possible | None required at $50,000 or less | Project assets | Intermediary's own |
| SBSS screening | Discontinued 1 March 2026 | Not applicable | Unaffected — may still be used | Not applicable | Not applicable |
| Borrower equity | Only for start-ups and changes of ownership | Same | Same | 10% / 15% / 20% by situation | Intermediary's own |
| Criminal-history gate | Ineligible-business rules apply | Same | Same | Stricter — a "Yes" on Form 1244 makes the applicant ineligible | Intermediary's own |
7(a) Small
Standard 7(a)
SBA Express
504
Microloan
Two things this table is not. It is not a statement of which programs are available through any particular route — availability depends on the individual financing provider, the transaction and underwriting. And it is not exhaustive: each program carries further conditions that apply case by case. If the core eligibility rules on this page rule you out, they rule you out across all of them — those are program-wide.
Businesses SBA will not finance
Worth reading properly, because several entries catch business models that sound entirely ordinary — and because this is checked before anything else about your application matters.
The models that surprise people
Shopping centres, office suites, salon suites and ghost kitchens are ineligible unless all three of the following hold: revenue comes from membership dues rather than rent; customers have no assigned space they can return to or personalise; and the business supplies the upkeep and the equipment for a working space. A mixed model — part rent, part dues — is fully ineligible. There is no partial position here.
Land leased for a cell tower, solar panels, a billboard or a wind turbine is not eligible. The business operating the tower or the panels is.
A management agreement that gives a third party sole discretion over operations makes the business an ineligible passive company. To keep "meaningful oversight," the applicant must approve the annual operating budget, approve spending above a set threshold, control the bank accounts, and supervise the operating staff — who must be the applicant's own employees.
The full ineligible list
Categorically ineligible
- Non-profits (a for-profit subsidiary may be eligible)
- Businesses primarily engaged in lending or investment — banks, finance companies, factoring companies, investment companies, bail bond companies, life insurance companies. Independent insurance agents are fine.
- Passive businesses and landlords that do not use or occupy what the loan buys
- Businesses subdividing real property for resale
- Loan packagers earning more than a third of gross annual revenue from packaging SBA loans
- Businesses of a prurient nature, or deriving more than 5% of gross revenue from such material
- Businesses in which the lender or its associates hold an equity interest
Eligible only under conditions
- A pawn shop, if more than 50% of last year's revenue came from selling merchandise rather than from interest
- A business financing its own credit sales, if less than 50% of revenue comes from that financing
- A check-cashing business, if more than 50% of revenue is from cashing cheques
- A mortgage company that sells loans within 14 days of closing; one that holds loans in portfolio is not eligible
- A fee-based financial advisor, provided loan proceeds are not invested in its own portfolio
Source: 13 CFR § 120.110; SOP 50 10 8, Section A, Ch. 1, Para. E.
What stops applications that otherwise look strong
A previous loss to the federal government
An applicant is not eligible for a 7(a) or 504 loan where there has been a prior loss to the federal government — either by the applicant, or by any other business owned, operated or controlled by the applicant or an Associate.
"Loss" is defined broadly. It covers any deficiency a federal agency has written off, including amounts settled for less than the full balance and amounts discharged through bankruptcy.
Two exclusions matter, and both are good news:
- Unpaid or delinquent taxes are not a prior loss. They may still cause problems in underwriting, but they are not this bar.
- Loans issued to an individual are not a prior loss — a defaulted student loan is explicitly outside the definition, as are loans purchased or held by Fannie Mae or Freddie Mac.
Criminal history — narrower than most people assume
The rule is specific, and it is worth reading exactly rather than assuming the worst. A business is ineligible where an Associate is:
- currently incarcerated, or
- serving a sentence of imprisonment imposed on a finding of guilt, or
- under indictment for a felony, or for any crime involving or relating to financial misconduct or a false statement.
And then, directly: "A business that is owned by an individual(s) who is currently on parole or probation may be eligible." Where the business depends primarily on that person, the applicant must give the lender a plan for continuing operations in the event of reincarceration, and the lender may ask for an additional guarantor.
A completed sentence is not on this list. The bar is aimed at current custody, current sentences and pending felony charges — not at a conviction in the past.
One program is stricter. For 504 loans specifically, if any Associate answers "Yes" to the criminal-history question on SBA Form 1244, the applicant is not eligible.
Being too strong for the program
Covered earlier, but it belongs on this list: if you would qualify conventionally on reasonable terms, you are not eligible. How "credit not available elsewhere" works.
Sources: 13 CFR § 120.110(q) and § 120.110(n); SOP 50 10 8, Section A, Ch. 1, Paras. E.12 and E.15; 504 rule at Section C, Ch. 1.
What you will be asked for
Requirements are proved with documents. These are the ones SBA's own procedures require a lender to obtain or produce.
Expect these on essentially every application
- Business and personal tax returns, verified against IRS tax transcripts — the lender orders the transcripts and compares them to what you submitted
- SBA Form 1919, the 7(a) Borrower Information Form (Form 1244 for 504)
- SBA Form 413, a Personal Financial Statement from every guarantor except supplemental guarantors — signed and dated within the last 120 days
- Credit reports on the business, every 20%+ owner, affiliates and guarantors
- The two most recent months of activity on your primary business operating account
- Year-end financial statements plus a current interim statement
- A debt schedule — every business obligation, because all of it goes into the coverage calculation
- Business formation documents, and documentation of citizenship status for every owner
- SBA Form 148 or the lender's equivalent guarantee, at closing
Depending on the transaction
- Projections — at least two years for a projection-based 504 project
- Purchase and sale agreements, fully or partly executed, for an acquisition
- Financial statements and tax returns for the business being acquired
- An independent appraisal on project real estate
- Environmental analysis where the property calls for it
- Contractor costs, vendor quotes and estimates on a construction or equipment project
- SBA Form 2481 where a historic property is involved
- Franchise documents, where the FTC definition of a franchise is met
- SBA Form 159, where fees are paid to an agent or representative
- Two years of financials where you are qualifying under the alternative size standard
- Evidence of where your equity injection came from, where an injection is required
Lender practice
Lenders routinely request material beyond SBA's list — a business plan, a résumé, accounts receivable ageing, insurance certificates, a personal debt schedule. That is normal and it is not a warning sign.
One thing predicts a fast file more than anything else: having these assembled before you start, rather than producing them one at a time as they are requested.
Source: SOP 50 10 8, Sections A Ch. 5, B Ch. 1–2, C Ch. 1.
Insurance and closing conditions
Hazard insurance is required on all assets pledged as collateral, for 7(a) loans over $50,000 and 504 projects over $50,000. SBA is blunt about the consequence: "If hazard insurance is not available, the loan cannot be approved." Where your state requires separate wind, hail or earthquake cover, that has to be in place too.
Life insurance is not an automatic SBA requirement. Lender practice The lender decides whether to require it, following the same written policies it applies to comparable non-SBA loans. It comes up most often where the business depends heavily on one person.
Flood cover applies where any part of a collateral building sits in a special flood hazard area.
Source: 13 CFR § 120.160(c); SOP 50 10 8, Section A, Ch. 5, Para. C.
A readiness check before you apply
Nothing here is a decision, and nothing here is a promise. It is a way of finding out which conversation you are about to have.
Hard gates
Get these wrong and nothing else matters.
- Every direct and indirect owner is a U.S. citizen or U.S. national, resident in the U.S.
- The business is for-profit, operating, and located in the U.S.
- It is not on the ineligible-business list — including the passive-business and management-agreement traps
- No owner or Associate has caused a prior loss to the federal government
- No Associate is incarcerated, serving a sentence, or under felony indictment
- The business is small under its NAICS standard, or under the alternative size standard
The underwriting picture
Where most of the real conversation happens.
- You can calculate EBITDA ÷ (existing debt service + the new payment) and it is at least 1.10
- You know every owner's personal credit score
- You can list the business's fixed assets and roughly what they are worth
- You know which owners hit 20% — counting spouses and minor children together
- If this is a start-up or an acquisition, you know where 10% is coming from and can document it
The paperwork
Assembled before you start, not during.
- Two years of business and personal tax returns
- Year-end and current interim financial statements
- A complete debt schedule
- Two months of business bank statements
- Formation documents
If some of this is missing, that is normal, and it is not a reason to stop. It is a list of what to work on — and cash flow is almost always the one worth working on first.
SBA rule changes in 2026
Several of the most-repeated "SBA requirements" online describe rules that are no longer in force. This is what actually changed.
| Change | What it is now | Effective | Source |
|---|---|---|---|
| Owner citizenship tightened | 100% U.S. citizen or U.S. national ownership, with U.S. principal residence. Green card holders no longer eligible to own any share. The 5% foreign-ownership exception rescinded. | 1 Mar 2026 | Policy Notice 5000-876441 |
| "Ineligible Person" redefined | Now expressly includes LPRs, citizens of the PRC and Hong Kong SAR, OFAC-listed persons, and anyone whose principal residence is outside the U.S. | 1 Mar 2026 | Procedural Notice 5000-876626 |
| FICO SBSS screening ended | 7(a) Small Loan applications no longer receive or are screened by an SBSS score. | 1 Mar 2026 | Procedural Notice 5000-875701 |
| A published coverage minimum | 7(a) Small Loans must show debt service coverage of at least 1.10:1. | 1 Mar 2026 | Procedural Notice 5000-875701 |
| Collateral floor | No collateral required at $50,000 or less — not the $25,000 still widely quoted. | 1 Jun 2025 | SOP 50 10 8 |
SBA has published SOP 50 10 8.1, which replaces SOP 50 10 8 for applications receiving an SBA loan number on or after that date. Applications submitted and numbered on or before 30 September 2026 continue under the rules described on this page.
The borrower-facing changes are concentrated in two areas: buying a business — four transaction categories, coverage standards of 1.25:1 or 1.15:1, quality-of-earnings analysis on larger purchases, and a business valuation ceiling on total transaction debt — and collateral, with much more specific rules on when and how far a lien can reach personal real estate.
Core eligibility, the citizenship rules, the guarantee rules and the $50,000 collateral floor are unchanged.
What to do with all this
Most people arrive at a page like this to answer one question — would we qualify? — and leave with a more useful one: what would we need to change?
Find out what providers actually say
If the hard gates are clear and the cash flow works, the practical next step is to hear what real financing providers say about your specific numbers, rather than what a page says about businesses in general. Requirements above SBA's own minimums are set by each provider, and they differ.
SBA may be the wrong shape
SBA loans are the slowest financing a business can arrange, and that is the trade for the terms. Where the need is immediate, other structures are usually the better answer — a working capital loan, a business line of credit, or a term loan.
SBA is not the route
No amount of preparation changes a hard gate. The rest of the market still is open to you, and it is worth looking there rather than spending months on an application that cannot clear an eligibility rule.
Checking your options is a soft inquiry and won't affect your credit score.
Fundur is a financing marketplace, not a lender, and not the SBA. We help business owners explore and compare SBA financing options from lenders and financing providers in our network — one application rather than one per lender. What any given provider can offer depends on the provider, the transaction and its own underwriting. Nothing on this page is an approval, and meeting every requirement here does not guarantee one. Eligibility is decided by a lender and, for SBA financing, by SBA.
Common questions
Does the SBA set a minimum credit score?
No. SBA requires that an applicant be "credit worthy" with a reasonable ability to repay, and publishes no minimum score. Individual lenders set their own expectations, commonly in the high 600s.
Can you get an SBA loan as a start-up?
Yes. There is no minimum time in business in SBA's eligibility rules. SBA does define a start-up — a business generating revenue for one year or less — and requires a 10% equity injection on 7(a) loans to one.
Do SBA loans require collateral?
Not below $50,000 on a 7(a) Small Loan or an SBA Express loan. Above that, the loan is secured as far as the business's assets reasonably allow. A loan is not declined solely for inadequate collateral — but the guaranty does not excuse you from pledging collateral you have.
Do all owners have to sign a personal guarantee?
Every owner of 20% or more, yes — an unlimited full guarantee. Spouses each owning less than 20% must both guarantee in full where their combined interest, with minor children, reaches 20%.
Can a green card holder own part of a business applying for an SBA loan?
No. Since 1 March 2026, Lawful Permanent Residents are not eligible to hold any ownership interest. Ownership must be 100% U.S. citizens or U.S. nationals with U.S. principal residence.
Does a past criminal conviction disqualify you?
Not in itself. The bar applies to an Associate who is currently incarcerated, serving a sentence, or under indictment for a felony or a financial-misconduct offence. Someone on parole or probation may still be eligible. The 504 program applies a stricter test.
How much do you need for a down payment?
On most 7(a) loans, nothing. A 10% injection applies to start-ups and to changes of ownership. 504 projects require 10%, rising to 15% or 20% for new businesses or special-purpose property.
Why does everything say two years in business?
Because most SBA lenders prefer it. It is a lender standard, not an SBA rule.
Where these rules come from
Every SBA rule on this page was checked against SBA's own published material. Lender practices are identified as such and are not sourced to SBA.
Last reviewed: 20 August 2026. Next scheduled review: 1 October 2026, when SOP 50 10 8.1 takes effect.