Part of our guide to the Lobi Capital. More guides on this topic
SBA money is the cheapest debt most small businesses will ever qualify for. It is also the slowest, and the most paperwork you will do for a single decision.
That trade is the whole story. If you need cash this week, this is not your product. If you are funding something that will outlive the loan, it usually is.
Lobi Space is not a lender and does not arrange SBA loans. This is a plain guide to what the process asks of you. For the full landscape, read how small business funding works.
What the SBA actually does
The Small Business Administration does not hand you money. It guarantees a portion of a loan made by a bank or approved lender, which lowers the lender's risk and lets them approve borrowers and terms they would otherwise refuse.
You still apply to a lender. The lender still underwrites you. The SBA sets the rules both of you play by, and it publishes those rules in plain language on its own loan pages. Twenty minutes there before you talk to anyone is twenty minutes well spent.
7(a) and 504, in plain language
7(a) is the general-purpose program. Working capital, buying a business, refinancing certain debt, equipment, sometimes real estate. It is the most flexible of the programs and the one most borrowers end up in.
504 is for fixed assets. Owner-occupied commercial real estate and major equipment, funded through a bank plus a Certified Development Company, usually with a longer term and a fixed rate on part of the loan.
If you are buying a building, look at 504. If you need operating money or are buying a business, look at 7(a).
What lenders will ask you for
Expect to produce most of this. Gather it before you apply and you cut weeks off the process.
- Business and personal tax returns, usually several years.
- Year-to-date profit and loss and balance sheet.
- Business bank statements.
- A personal financial statement, on SBA Form 413, from every owner at or above the ownership threshold. Twenty percent is the conventional trigger, and owners at that level should expect to sign the personal guarantee too.
- Formation documents, operating agreement, licenses and your EIN confirmation letter.
- A business plan or use of proceeds explaining exactly what the money does.
- A debt schedule listing every existing obligation.
A word about that EIN letter, because it stalls more real loan files than any other single page. The IRS issues it exactly once, when the number is first assigned, and calls it a CP 575. Lose it and the IRS will not print a second one. What you request instead is a 147C verification letter, by calling the Business and Specialty Tax Line at 800-829-4933, and lenders accept either document. If you are early enough that you have no EIN at all, apply directly with the IRS: the online application is free, runs weekday hours only, and issues the number the moment you finish. The IRS EIN page covers the 147C route and everything else about the number, and it is the page to bookmark rather than any third-party filing site that charges for the same thing.
What they are judging
- Repayment ability from cash flow. Projections help, history decides.
- Credit history. Personal and business, including any government debt.
- Owner investment. Lenders want to see your own money in the business.
- Collateral. It is considered, and a shortage of it does not automatically end a 7(a) application.
- Character and eligibility. For-profit, operating in the US, within size standards, and not in an ineligible industry.
Expect a personal guarantee from owners with meaningful ownership. That is standard, not a red flag.
How long it takes
Longer than you want. The application itself can take days to assemble. Lender review, SBA processing and closing add more. Owners who move fastest are the ones whose books are already clean and whose documents match each other.
That last part matters more than people expect. Your address, your legal name and your ownership should read identically on your filings, your bank account and your application. Mismatches trigger questions, and questions cost weeks. A single consistent commercial address helps here, which is one reason businesses use our virtual office in Chicago and keep their registered agent in good standing.
Where to start looking
Start with a bank that does real SBA volume, or an approved lender that specializes in it. Volume matters because experienced teams know what the file needs and ask for it once.
Two free tools shorten the search. The SBA's own Lender Match takes one short form and routes it to participating lenders, no fee, no obligation, and no effect on your credit. And before you submit anything anywhere, the SBA's local assistance directory lists the Illinois Small Business Development Centers, where an advisor will go through your file with you at no charge. An hour with a second set of eyes on the debt schedule is the cheapest insurance in this whole process.
When Lobi Capital opens, the goal is to help you shape the request before you sit down with anyone. Joining the launch list is not an application and does not affect your credit.
Frequently asked questions
What credit score do I need for an SBA loan?
There is no single published minimum. Lenders set their own thresholds, and stronger credit widens your options. Weak personal credit does not always disqualify you, but it narrows the list of lenders willing to look.
How long does an SBA loan take to fund?
Commonly weeks rather than days, depending on the program, the lender and how quickly you supply documents. Real estate deals take longer than working capital requests.
Do I need collateral for an SBA 7(a) loan?
Collateral is considered, and lenders take what is available. A lack of full collateral coverage does not automatically end a 7(a) application the way it might with conventional bank lending.
Can a brand new business get an SBA loan?
Startups can be funded, usually with strong personal credit, a meaningful owner cash injection, relevant experience and a detailed plan. It is harder than funding an operating business with history.
