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How Much Money Can You Borrow with an SBA Loan?

By Spodek Law Group | February 20, 2024

How Much Money Can You Borrow with an SBA Loan?

SBA Loan Amounts

The maximum loan amounts available through SBA loan programs vary depending on factors like the type of loan, how the funds will be used, and your business’s credit and eligibility. Some of the most common SBA loan types and maximum amounts include:

7(a) Loans

The 7(a) loan program is the SBA’s primary and most flexible loan program. Through this program, the SBA guarantees a portion of loans made by participating commercial lenders to eligible small businesses.

  • Maximum loan amount: $5 million
  • Average loan size: $350,000 to $400,000

504 Loans

The 504 loan program provides small businesses with long-term, fixed-rate financing for major fixed assets like real estate or heavy equipment. The loan is delivered through a partnership between a certified development company (CDC) and an SBA-approved lender.

  • Maximum loan amount: $5 million to $5.5 million
  • Average loan size: $350,000

Microloans

The Microloan program provides small, short-term loans to small businesses, often in underserved communities. The loans are delivered by specially designated nonprofit intermediary lenders.

  • Maximum loan amount: $50,000
  • Average loan size: $14,000

Disaster Loans

SBA Disaster Loans provide low-interest loans to businesses to repair or replace property damaged by a declared disaster.

  • Home and personal property loans up to $200,000
  • Business physical disaster loans up to $2 million

COVID-19 Relief Options

Special SBA relief options were also made available during the COVID-19 pandemic, including:

  • Paycheck Protection Program (PPP) loans up to $10 million
  • COVID-19 Economic Injury Disaster Loans (EIDL) up to $2 million

So in summary, maximum SBA loan amounts can range from $50,000 for microloans up to $10 million for special COVID relief options. The most common maximum cap is $5 million for standard 7(a) small business loans.

What Factors Determine Your Max Loan Amount?

While the SBA sets maximum thresholds, the actual maximum loan amount you can qualify for will depend on:

  • Your business revenues and cash flow – Lenders will review your business finances to estimate your ability to repay the loan. Higher revenues and stronger cash flow allow you to qualify for larger loan amounts.
  • How you plan to use the money – If you have an eligible use of funds directly tied to business growth or recovery, you may qualify for larger loan amounts than general working capital needs.
  • Collateral – For some loans, the SBA requires business owners to pledge personal assets as collateral to secure the borrowed amount. Stronger collateral allows bigger loans.
  • Your personal credit score – Your personal credit history and score plays a role in determining the risk and loan sizing, especially for smaller SBA loans.

So when determining “how much money can I borrow,” it’s not as simple as looking at the SBA maximums. A qualified small business lender will assess your revenues, expenses, collateral assets, and credit to shape the appropriate loan amount for your situation.

What’s the Average SBA Loan Amount?

While maximum SBA loan sizes can reach millions of dollars, most loans are much smaller. According to the SBA, the average loan size is:

  • 7(a) loans: Between $350,000 – $400,000
  • 504 loans: Approximately $350,000
  • Microloans: Around $14,000
  • Disaster home loans: $65,000
  • Disaster business loans: $160,000

So for most small business owners, you can expect to land an SBA loan between $65,000 and $400,000 depending on your specific goals.

How Do I Determine My Loan Amount?

As a small business owner, how much should you borrow with an SBA loan? Here are some tips:

  • Get clear on your funding needs – Create a business plan and analyze how much money you need for startup costs, equipment purchases, renovations, inventory, marketing, payroll, or operating expenses. Identify the gaps between your financing needs and available capital.
  • Consider your repayment abilities – Be realistic about your current and projected revenue and cash flow. Make sure you have adequate net operating income to cover both your business operating expenses and the loan repayment each month.
  • Align with your loan purpose – Apply for the SBA program designed to fund your purpose, whether it’s 7(a) working capital, 504 real estate and equipment, or disaster relief. This further shapes your optimal loan amount.
  • Prepare your documentation – Lenders will want tax returns, bank statements, profit and loss statements, business plans, and other files. Make sure documentation supports your requested loan amount.
  • Talk to an SBA lender – Connect with a qualified SBA lender like Lendio or SmartBiz Loans to discuss your specific situation and loan sizing options.

The bottom line is that SBA loan amounts depend first on the maximum thresholds for that loan type, second on your revenue and repayment abilities, and third on how the amount aligns logically with your business activities and purpose for borrowing.

Can I Get Multiple SBA Loans?

Small business owners are sometimes hesitant to take on debt, but SBA loans provide affordable capital to those who qualify. And yes, if your business continues to grow and requires more financing, you can qualify for multiple SBA loans of different types and purposes over time.

However, to get approved for a second loan, you will need to provide:

  • Documentation on how the first loan was used
  • Evidence you can manage this additional repayment responsibility
  • Justification for requiring more capital

As long as you deploy the loans strategically into activities that generate revenue and profit to cover the debt service, it is certainly possible to get two, three or even more SBA loans as your small business expands.

Next Steps to Borrowing an SBA Loan

Now that you know the maximum amounts and factors that influence SBA loan sizing, here are a few quick next steps to move forward:

  • Check your eligibility – Confirm you meet the SBA requirements like time in business, credit score, size standards, use of funds, and other criteria.
  • Choose an SBA lender – Find a lender that offers the loan you need. Online lenders like Lendio and SmartBiz Loans make it easy to see your options and apply online. You can also consider traditional banks that issue SBA loans. Compare interest rates and terms.
  • Gather your documents – Put together 2 years of personal and business tax returns, personal financial statements, business formation documents, business plans, profit and loss statements, balance sheets, accounts receivable/payable aging, and other files lenders typically request.
  • Apply for financing – Complete the lender’s application forms and submit your documentation for consideration. Be prepared to explain exactly how much money you need and how you will use the capital.

With some preparation and planning, SBA loans can provide small business owners and entrepreneurs with the working capital, equipment, renovations, or disaster recovery money they need to start, grow, and build resilience. Consider your funding needs, research your options, choose a lender, compile files, and apply for the best SBA loan for your small business goals.

Resources

  • SBA Disaster Loan Assistance video: YouTube
  • How to Qualify for an SBA Loan article: NerdWallet
  • SBA Loan Requirements overview: SBA.gov

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