Is a Second SBA Loan Right for You?

September 7, 2022

Small Business Administration (SBA) loans are typically the best financing options for small business owners looking to start or grow their business. They are backed by the SBA and come with various loan amounts, low interest rates, flexible spending options, and extended repayment periods. And while many owners have turned to financial institutions such as BayFirst for a small business loan since the SBA was established in the 1950’s, not all are aware that they can have multiple should their business require it – but there are some qualifications.
 
To qualify for an additional SBA loan, you must:
 

• Have an existing SBA loan in good standing. This means you show no negative payment history and continue to meet all terms.
• Stay within SBA loan program borrowing limits. For 7(a) loans, the SBA lending limit is $5 million, while 504 loans are capped at $5.5 million. So, you’ll have to be sure all your SBA loan amounts total less.
• Be able to demonstrate positive cash flow. Your business must be earning more money than it is spending to prove ability to repay your new loan.
• Have a solid credit score. Lenders set their own credit score requirements for SBA loans, but you'll typically need a score somewhere around 650+ at the time of application.
• Provide sufficient collateral for each loan. For loans greater than $25,000, you’ll need to provide collateral – such as real estate, equipment, inventory or vehicles – separate from what you provided for your first loan.
• Sign a personal guarantee on each loan. This holds the signer responsible for paying back the loan should the business be unable to make payments.
• Provide a thorough business plan. Your lender will need to know how you plan to use your funds as well as your strategy, expected revenue, expenses and more to determine your potential for long-term success.
• Maintain SBA borrower eligibility. This includes operating as a for-profit business, being based in the U.S., meeting the SBA’s definition of a small business, and operating in an approved industry. Learn more about the full list of requirements.

 
If you currently have an SBA loan through BayFirst’s SBA division or another lender and have identified a way more funds can improve any aspect of your business, a second SBA 7(a) loan could be a great first choice. And if you need funds fast in today’s economy, a BOLT loan might be your best bet.  BOLT loans deliver funding up to $150,000 in days, not weeks, and come with the personalized support of a team whose goal is to help you reach yours fast.
 
BayFirst is a top nationwide SBA lender, which means we have what it takes to power your small business through multiple SBA loans. And the process will be fast and easy from start to finish. Get started today by filling out the form below!