AMB Performance Group Blog

SBA Loans: How to Qualify for Guaranteed Funding

Posted on: June 14, 2021
Business Success

Ensuring your business has the capital it needs to continue running can be a challenge. While there are many different sources of funding to help keep your small business’ doors open, one of the most common for business owners like you is a loan.

Many companies even qualify for a guaranteed loan from the United States Small Business Administration, or SBA for short.

Understanding the Guaranteed Loan Program

The SBA offers a number of different resources to small business owners. Initially created in 1953, it works to protect the interests of small businesses and their owners. The goal is to strengthen the nation’s economy.

There are currently more than 30 million small businesses in the United States and growing. According to the Small Business Administration surveys, offering business owners the resources needed to keep moving forward is key to our economic well-being.

The Guaranteed Business Funding program is the primary loan program from the SBA, and its official name is the 7(a) General Business Loan Guaranty Program.

This program is primarily offered to assist in the short-term and long-term needs of an existing business or startup.

If you get an SBA guaranteed loan, they won’t actually be loaning you the money. Instead, you’ll work with a private lender to get the money you need and they’ll guarantee repayment of up to 80% of the loan, making you a very attractive option for a bank.

Loans can be made in every amount, and they’re generally guaranteed up to $750,000. You can use the money for things like purchasing equipment, having additional working capital on hand, taking measures to improve your business further overall – now and for future growth.

While there are private business loans available from many of the same institutions that back this program, those can be tougher to get, particularly for small businesses where the profit margin is sometimes a bit thin.

Qualifying for SBA Guaranteed Business Funding

Qualifying for an SBA Guaranteed Business Funding is much like qualifying for any other type of loan. However, it’s important to note that your qualification is based on whether the SBD considers your organization to be a small business.

That means that your company has fewer than 1,500 employees, and you don’t do more than $38.5 million in business each year.

While most of the businesses that qualify for this kind of funding are far smaller, the rule is that they can’t be larger. Additionally, it should be headquartered and primarily operated from the United States, be a for-profit entity, and be independently owned and operated.

Moreover, you must have used other financial resources, like your personal assets, before seeking financial assistance of this kind.

Even franchises are eligible for this kind of funding as long as the franchisee has the right to profit from his or her efforts.

Keep in mind that not every small business can qualify for this kind of loan. The SBA has a number of different exceptions that should be considered.

These include real estate investment firms, oil or commodity firms, lenders, pyramid-based companies, as well as gambling institutions, and non-profit or government-owned entities.

If you’re sure you qualify based on these factors, you’ll need to further investigate each institution’s requirements. For example, you’ll need to demonstrate your annual revenue.

You will need to have been in business for a certain amount of time and a worthy credit score to obtain this kind of loan.

Each SBA Guaranteed Loan will have different interest rates, varying fees, and different loan terms. While the SBA officially encourages small businesses to get longer-term loans that are easier to pay off over time, there are some fairly short-term guaranteed business loans out there for which many companies can qualify.

Is Guaranteed Business Funding Right For You?

Not sure whether this is the right opportunity to meet your needs? It may not be. If you want to do more with your company, your best bet is to work with a business coach, such as our experienced team at AMB Performance Group, to help guide you toward the financing strategies that benefit you the most. We’ll work with you to meet your short-term and long-term business goals; contact us today.

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