June 3

Secrets to Succeeding in SBA Financing: Navigating Approval Amounts and Loan Requirements


Securing SBA financing can be a daunting task for many entrepreneurs. However, with the right guidance and understanding of the process, you can navigate approval amounts and loan requirements successfully. In this blog post, we'll explore the essential steps and considerations for obtaining SBA financing, based on insights from a seasoned commercial loan advisor.

Understanding Total Project Costs

One of the first steps in applying for SBA financing is to accurately calculate your total project costs. This includes not only the franchise requirements but also additional expenses such as office space, equipment, and other operational needs. For instance, if you are purchasing an HVAC franchise, you would need to consider the cost of two trucks and 1,000 square feet of office space.

Gathering necessary documents such as invoices and lease agreements is crucial to determine these costs accurately. Many applicants make the mistake of relying solely on the Franchise Disclosure Document (FDD) without breaking down the expenses into specific items and obtaining copies of relevant documents. By doing so, you ensure that your project cost calculations are comprehensive and realistic.

Meeting Bank Requirements

Different banks have varying requirements for approving SBA loans. These requirements often include equity injections, reserves, and credit scores. For example, some banks may require a 10% equity injection along with seven or eight months of reserves. Others might be more flexible and build in working capital as part of your reserves.

A critical aspect of the approval process is the Small Business Scoring Service (SBSS) model used by the SBA. Typically, a score of 165 or better on this model significantly increases the likelihood of loan approval. Understanding these requirements and working with an advisor who can match your needs with the right bank is essential for a successful application.

The Role of Commercial Loan Brokers

Commercial loan brokers play a pivotal role in the SBA financing process. They bring a wealth of knowledge and experience to the table, helping to present your application in the most compelling way possible. By addressing potential red flags upfront and highlighting the strengths of your business, brokers can significantly improve your approval odds.

Finding the right commercial loan broker is crucial. Look for professionals with a proven track record of success, strong reputations, and extensive experience in SBA financing. Their expertise can be invaluable in navigating the complexities of the application process and securing the funding you need to propel your business forward.

Current Trends in SBA Lending

In the current lending environment, there is a high demand for refinancing existing loans and acquiring franchises. Many borrowers are looking to lower their debt payments by refinancing variable-rate loans into fixed-rate options. The Wall Street Journal prime rate, often used as a benchmark, has risen, causing many 7A loan holders to seek more stable and affordable financing solutions.

The SBA has also made the refinancing process simpler. Previously, borrowers needed approval from their existing SBA lender, but this requirement has been removed. Now, as long as the debt is eligible for a 7A refinance, the process can proceed more smoothly. This change opens up new opportunities for borrowers to extend their loan terms, reduce interest rates, and ultimately increase their cash flow.

Refinancing Options

For those looking to refinance, there are several attractive options available. SBA 7A loan borrowers can now refinance into fixed-rate options or extend their loan terms to improve cash flow. For instance, if you have been in a loan for a couple of years, you can extend it to a 10-year term and secure a fixed rate for the first five years at a margin significantly lower than the current prime rate.

Additionally, the SBA has waived guarantee fees for loan amounts under one million dollars, providing significant savings for borrowers. There are also options for those who prefer adjustable rates, with terms such as a 90-day variable option at prime plus 1.25%.


Navigating the complexities of SBA financing can be challenging, but with the right knowledge and support, you can secure the funding needed to grow your business. Understanding your total project costs, meeting bank requirements, leveraging the expertise of commercial loan brokers, and exploring current refinancing options are all critical steps in this process. By taking these steps, you can unlock the door to successful SBA financing and propel your business forward. For more personalized advice and support, consider consulting with a commercial loan advisor who can guide you through every step of the application process.


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