Power of a SBA 7(a) Loan for Debt Consolidation or Working Capital

Quick-hit guide to SBA 7(a) loan qualifications:

- Personal credit: 675+ is the sweet spot. Some lenders drop to ~640 if you can fully secure the loan with collateral.

- Soft pull first: Many lenders start with a soft credit inquiry, so shopping around won’t ding your score.

- Unsecured options: Solid credit can get you up to $500k with no personal assets tied up—just business.

- Scoring systems: Banks lean on the SBA’s E-Tran/SBSS scores. A 170+ usually means faster approvals; 165 is the typical minimum.

- Express programs:

– Up to 33 % of gross revenue (max $150k) or 25 % (max $200k), depending on the bank.

– Need credit 700+ for most, 675+ for a few niche lenders.

– Higher rates: WSJ Prime + 3–6 %.

- Uses: working capital, debt refinancing, big equipment buys. Always comes with a personal guarantee.

- Terms: 10-year amortization, no balloons, no prepayment penalties.

Heads-up on the background check piece of SBA underwriting:

- Expect a deep dive. Old issues usually aren’t deal-breakers, but be ready to explain them.

  – Prior bankruptcies: they can still ask even if it’s 10+ years old. Anything more than 3 years back rarely stops a deal if you have a solid story.

  – Open lawsuits or judgments—personal or business—will get flagged and need clarification.

- UCC filings: lenders pull the full history. If a previous lender never terminated a lien, you’ll have to prove the debt’s paid and get it released.

- Plenty of other quirks can surface, but those are the questions that pop up most often. Have documentation and straight answers ready and you’ll keep the process moving.

Documents that are usually required for an SBA Loan:

- Year to Date P&L & Balance Sheet

- 3 years business & personal tax returns (if business is new & only have 2 years of business taxes, you are ok to proceed, but need at least 2 years of business tax returns

- SBA - Form 413 - Personal Financial Statement

- SBA - Form 1919 - Application

- Debt Schedule

- Equipment/Asset List

- Payoff information on all loans being consolidated

- Multiple Entity Addendum

- 8821 or 4506 - Tax Authorization Form - standard to verify accuracy of tax returns & tax liability exposure

- Some banks require 6 months of bank statements to measure for liquidity

- Articles of Incorporation

- Verification of Liability Insurance, & Workers Comp Insurance (not required in all states)

- Business Personal Property Insurance check - Frequently asked for, but also frequently waived as a request by the lender, but not in all instances.