How Many SBA Loans You Can Apply For

How Many SBA Loans You Can Apply For?

For small business owners, access to capital is a perennial issue. However, the Small Business Administration (SBA) offers several loan programs, making it easier for the entrepreneur to obtain the money necessary to scale the business, expand or address any critical period that could hamper its smooth performance. What if a small business requires more than one loan? Can an individual apply for multiple SBA loans, or does such a program have limitations?

This comprehensive guide will discuss just how many SBA loans you can apply for and other factors that lenders consider when approving your loan applications. So, let's begin the blog!

Can You Apply for More Than One SBA Loan?

Yes, it’s possible to hold more than one type of SBA loan. The SBA offers businesses the option to receive multiple forms of capital financing for various needs. However, there are conditions and rules that you should follow when you pursue an SBA loan.

Applying for SBA Loans Basic of its Different Categories

Applying for various kinds of SBA loans is permitted; however, applying for several loans of one kind to finance the same purpose, such as two SBA 7(a) loans, is usually prohibited. When you get the SBA 7(a) loan for working capital, you cannot get another 7(a) loan for working capital unless the original loan balance has not been reduced considerably or paid back.

SBA Loan Limitations

There is a maximum loan limit for each SBA loan program, but all offer flexible repayment terms and interest rates. 

• SBA 7(a) Loan: Maximum of $5 million
• SBA 504 Loan: Typically up to $5.5 million for business assets
• SBA Microloan: Up to $50,000

A business owner can apply for as many SBA loans as long as the loans do not exceed these limits. However, there are no limitations to the number of SBA loans a business can use over its lifetime. If the loans are for different purposes and the business is eligible, you can take the loan.

Key Points To Consider When Applying for Several SBA Loans

While you can technically apply for multiple SBA loans, it’s important to keep in mind several key factors that lenders will consider when evaluating your eligibility:

Creditworthiness and Creditworthiness Capacity

The SBA will factor in your ability to repay any particular loan as one of the essentials in the loan application process. Banks need to be sure that you are able to meet the repayments to both the loans issued. If your business is already indebted, taking another SBA loan will be challenging. Let alone the second or third loan if your cash flow cannot support the added burden.

Purpose of the Loans

The SBA will want to know how you will use the loan. Thus, proper answers must be provided. The SBA normally expects that no two loans be used for the same purpose.

For instance, using SBA 7(a), one is likely to be offered a loan for working capital and, on the other hand, an SBA 504 loan for buying property. For instance, it’s important to distinguish these needs from the other when applying for several loans.

Time Between Loans

Some of the questions that you may have to answer include: How long has it been since you received an SBA loan? There is no mandatory cooling-off period. However, establishments that have recently graduated from the SBA loan may be strained in getting the second one. In this case, there is a great need to access the financing. Specifically, the better one’s financial history is, the more time there is since the last application for a loan, the greater the chances of approval of multiple loans.

Your Creditworthiness

Hence, credit score is an important determinant of the procedure for loan approval. Your personal and business credit scores will likely play a crucial role when you decide to lend. It does open the possibility of approval for several loans if you have been able to repay previous money that you borrowed, but if this was difficult or had a bad credit history, requesting multiple loans can be a problem.

Can I Have Two or More SBA Loans Combined?

Sometimes, it might be possible to refinance one or more SBA loans into one big loan, depending on the situation of the borrower. This is usually accomplished by SBA debt refinancing or debt consolidation. Whatever the case, however, the loans must meet the general requirements of SBA loans. This allows you to have one big loan from the SBA loans, payable in a single monthly installment, rather than having many loans with different installments. This can sometimes un-complicate your repayments and even get better terms depending on the circumstances.

Debt consolidation will prove beneficial if you have availed a number of loans in the past years and now you want some kind of ease in your repayment process. However, if a business goes in for a new loan, it should ensure that the terms of such loans are as suitable for business as the guarantees offered.

Maintain SBA Loan Eligibility 

Meet the basic loan requirements

Keep a good credit score

Create a robust business plan

Not be a type of ineligible business

Be located in the U.S

Ability to repay the loan

In Conclusion:

As much as there is no maximum number of SBA loans that one can apply for. Regulations and eligibility requirements define the use of loans. Indeed, according to the SBA rules, one business can apply for several loans so long as they serve different purposes and the business meets SBA eligibility requirements. Also, they need to show that they have the financial staying power to manage and pay off all these loans without heavily giving in.

SBA offers many loan programs. If your business requires one kind of credit or another, it can apply for several kinds of SBA loans. However, when applying for credit for the same need, it is impossible to take a second and third loan simultaneously unless the previous loan has been completely repaid. Learn more!

If you are ever thinking of availing of more than one SBA loan, then it is highly advisable to consult with an SBA-approved lender who can assist you and advise you on what to do to get the best for the welfare of your business.

Interested in discovering more about topics like this? Click Here!

Read this for starting an online business:

https://www.pitchbusinessblogs.com/five-steps-to-starting-an-online-business/