Posts by businessconsu1

### **SBA Loan Requirements: How To Qualify**

Shopify outlines the key requirements to qualify for SBA loans in their latest blog post as of 2024. Here is a summary of the main points:

**1. For-Profit Operation:**
– Requires the business to be a for-profit entity. Exceptions are made for for-profit subsidiaries of non-profit organizations.

**2. US-Based Business:**
– The business must operate and be physically located in the US, including US states and territories.
– The business must be majority-owned by US citizens or lawful permanent residents.

**3. Credit Score Minimums:**
– Personal credit scores of 640 or higher are often required. Some lenders may have higher requirements, such as 690 or more.
– SBA 7(a) small loans require a minimum FICO Small Business Scoring Service (SBSS) score of 155.

**4. Owner’s Invested Equity:**
– While the SBA has loosened equity requirements, for example, loan amounts above $500,000 generally require a 10% equity injection from the owner.
– Lenders may have their own requirements that differ from these standards.

**5. Specific Requirements by Loan Type:**
– **SBA 7(a) Loans:**
– Loan sizes range from $500,001 to $5 million.
– Typically require a personal credit score of around 640 or higher.
– A 10% down payment is often required.
– Funds can be used for various purposes, including working capital, real estate acquisition, and debt refinancing.
– Smaller 7(a) loans ($500,000 or less) may not require collateral, but certain lenders might still require it.

**6. SBA Loan Eligibility FAQ:**
– SBA loans typically require a thorough application process with stricter review processes, as they offer more favorable terms.
– The easiest SBA loan to get approved for is the SBA Express loan, which has less stringent requirements but lower maximum guarantees.

For detailed information and specific requirements tailored to different loan types, consult the Shopify blog on SBA loan requirements[1].

**Top SBA Lenders Making Waves in Small Business Financing**

In 2024, the SBA lending landscape saw significant shifts and notable movers, shaping the future of small business financing. Here’s a summary of the main movers and shakers:

1. **Live Oak Bank**:
– **Steady Dominance**: Live Oak Bank maintained its top spot by consistently providing high loan volumes, with $1.58 billion in SBA 7(a) loans in 2024.
– **Market Share**: The bank’s strong market share is attributed to its ability to serve diverse industries and its high loan volume, making it a reliable lender for small businesses[4].

2. **Huntington Bank**:
– **Significant Growth**: Huntington Bank significantly increased its market share over the past four years, focusing on small businesses with an average loan size of $246,000 in 2024[4].
– **Competitive Edge**: The bank’s aggressive lending strategy and competitive offerings have positioned it as a top contender in the SBA lending market.

3. **Readycap Lending, LLC**:
– **Rapid Ascent**: Readycap Lending, LLC climbed into the top 3 in 2024, demonstrating adaptability in serving diverse industries and ascending the ranks of SBA lenders[4].
– **Innovative Approach**: This non-traditional lender’s success indicates a growing role for fintech and alternative lenders in SBA financing.

4. **Newtek Bank**:
– **Consistent Performance**: Despite fluctuations in ranking, Newtek Bank remained a top player by maintaining a strong focus on small business lending[4].
– **Reliability**: The bank’s steady performance reflects its commitment to providing reliable financial services to small business owners.

5. **U.S. Bank**:
– **Shift in Strategy**: U.S. Bank shifted its focus towards smaller loans, maintaining a robust loan count though total volume saw minor fluctuations[4].
– **Market Evolution**: This strategic shift reflects the trend of lenders prioritizing higher loan volume with smaller loan amounts to cater to a broader range of small businesses.

6. **Lendistry’s Rise**:
– **Breakout Success**: Lendistry surged from #87 in 2023 to #20 in 2024, marking a significant rise in the market[4].
– **Fintech Influence**: Lendistry’s rapid ascent signifies the increasing impact of fintech and alternative lenders in the SBA financing sector, offering more accessible and competitive loan options to small businesses.

**Navigating Small Business Financing Opportunities in 2025: Key Insights for Buying a Business**

Buying a small business can be a lucrative opportunity, but navigating the financing process is crucial for success. Here are the key insights from the article:

– **SBA Loan Programs**: The U.S. Small Business Administration (SBA) offers various loan programs, including the Section 7(a) program, which provides financing options for purchasing assets or acquiring an existing business. These loans are federally backed, offering competitive interest rates and easier approval processes. However, they typically require good credit and a 10% to 20% down payment[2].

– **Multi-Financing Strategies**: Buyers often use a combination of financing methods, such as SBA loans, seller’s notes, and other bank financing. Personal guarantees may be required for some loans, meaning business owners could need to put personal assets like their residence as collateral[2].

– **Importance of Planning**: A long-term plan for the business is essential when buying one. Buyers should consider their exit strategy, growth plans, and what they aim to achieve from the acquisition. Passion is important, but a well-thought-out strategy is more critical for the business’s success[2].

– **Preparation is Key**: To secure an SBA loan or any other financing, it’s essential to prepare thoroughly. This includes reviewing SBA criteria, gathering comprehensive business plans, financial statements, and personal financial documents, and selecting an SBA-approved lender[3].

By understanding these financing opportunities and planning strategically, small business buyers can increase their chances of success in the competitive market.

**SBA’s Proposed Rule on Size and Status Recertifications Brings Uniformity and Change to Government Contracting Landscape**

The Small Business Administration (SBA) has proposed a new regulation aimed at simplifying and standardizing the recertification processes for small businesses and their socioeconomic status under various programs such as the 8(a) Business Development Program, HUBZone, women-owned small businesses (WOSB), and service-disabled veteran-owned small businesses (SDVOSB) [1].

### Key Changes:
1. **Unified Recertification Standards**:
– The SBA seeks to consolidate size and status recertification standards across all small business programs into one regulation, 13 C.F.R. § 125.12 [1][3].

2. **Recertification Requirements**:
– Contractors are required to recertify their size and small business program status within 30 days of a merger, acquisition, or sale of or by the concern or an affiliate that results in a change in controlling interest [1][3][5].

3. **Impact on Eligibility**:
– If a business is found to be “other than small” or no longer meets the applicable socioeconomic status, it will be ineligible to submit offers for set-aside contracts after the triggering event occurs [1][3][5].

4. **Timeline for Recertification**:
– Long-term contracts require a size and status recertification within 120 days of the end of the fifth year of the contract. Contracting officers, however, can request recertification outside of this window if deemed necessary [1].

### Implementation Details:
– The proposed rule aims to address the widespread confusion and frustration over the current piecemeal regulations and case law.
– The regulation may introduce more uniformity but also has the potential to create more issues for small businesses [1].

### Effective Dates:
– The proposed rule was published in August 2024, and a final rule was issued subsequently with some changes effective January 16, 2025, with certain aspects of the recertification rule having a one-year grace period [3][5].

The SBA’s new regulation seeks to streamline and standardize the recertification process, potentially simplifying compliance for small businesses while ensuring that the eligibility criteria for participating in various programs are clear and consistent.