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Purchasing your first business can be a life-changing move—and with the help of SBA financing, it's more achievable than ever. In a recent video, SBA lending expert Beau Eckstein answered real-world questions about how to get funded for business acquisition or startup ventures in 2025. Here’s a complete breakdown of what you need to know.
✅ Can You Use an SBA Loan to Start a Business?
Yes! As long as the business is eligible under SBA guidelines, you can absolutely use SBA financing for a startup. Typical financing covers 70%–90% of startup costs, with the borrower contributing the remaining equity injection (commonly 10%–20%).
Beau notes that while SBA 7(a) loans are the most common for startups, SBA 504 loans are usually reserved for heavy equipment or real estate purchases and are not ideal for startup vending machine businesses, for example.
🏪 Buying Vending Machines? Use SBA 7(a)
Beau shares that for someone buying, say, $100,000 worth of vending machines, he can finance $90,000 through SBA 7(a), requiring the borrower to bring $10,000 to the table. These machines count as business equipment and are easy to bundle under one loan package.
📋 Do You Need a Business Plan?
Yes—startups absolutely require a business plan for loan approval. Beau recommends using AI tools like ChatGPT for a first draft and supplementing it with help from free nonprofit mentorship organizations like SCORE. The plan doesn’t have to be flashy but must explain the business thoroughly for underwriting purposes.
💳 What If You Don’t Have Great Credit?
Your credit score matters, especially for startups. If you’ve had high credit utilization (e.g., maxed-out cards), work on paying them down before applying. Scores above 680 are ideal but not mandatory. Beau offers a few alternatives if your credit is struggling:
- Repair credit first
- Partner with a strong co-signer
- Own less than 20% of the business so you're not a guarantor on the loan
🧾 What If You Don’t Have the Cash for a Down Payment?
Lack of capital doesn’t mean you’re out of luck. Consider:
- Asking the seller for partial seller financing
- Bringing in a money partner to invest equity
- Exploring Merchant Cash Advances (MCAs) if you have strong business revenue (though these are expensive)
🏥 What About Assisted Living or Specialty Startups?
Beau confirms SBA financing can be used for residential assisted living facilities, but you’ll need proper zoning, licensing, and permits in place before closing. He also recommends starting a new entity for the new line of business to better align with SBA requirements.
⏱️ SBA Loan Timeline: How Long Does It Take?
- Franchise Startups: As fast as 3 weeks
- Business Acquisitions: Typically 45–60 days
- With Real Estate: Add time for appraisal and environmental reports
Delays usually come from borrower-side bottlenecks—missing paperwork, poor organization, or tax issues.
🎓 Can Recent College Grads Qualify?
Yes, but experience matters. If you're fresh out of college, Beau recommends starting smaller—maybe a $100K franchise instead of a $1M gym acquisition. If you have $100K in capital, good credit, and the business cash flows well, you can still potentially qualify for the larger deal.
🏦 Should You Get Pre-Qualified Before Finding a Business?
Not necessarily. According to Beau, pre-qualifications don’t carry much weight unless you're unsure about your eligibility. What matters most is:
- Credit score
- Outside income
- Personal liquidity
- Three years of seller tax returns
If those line up, get the business first, then structure the financing.
⚠️ Industries NOT Eligible for SBA Loans
SBA loans do not fund:
- Cannabis businesses
- Money-lending businesses
- Religious organizations
If you're in one of these fields, you’ll need to explore non-SBA funding options.
Final Tip: Use Your Credit Wisely
Keep credit card utilization under 30% of your credit limit. For example, if your card has a $10,000 limit, aim to keep balances under $3,000. Good credit opens doors to business lines of credit and funding without needing to dip into personal reserves.