These 7 Small Businesses Took SBA Loans. Here’s Their Honest Advice.

We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure.

Loans from the Small Business Administration (SBA) are a go-to option for businesses at every growth stage. 

But, as is common with many federal government operations, the application process is full of nuance and paperwork. This can make it daunting for smaller entities with fewer resources—which precisely describes many loan seekers.

To help navigate this complex process, Business.org surveyed over a dozen small-business owners that have taken out SBA loans.

Here are five insider tips to get Uncle Sam to back your entrepreneurial dreams


Our top-rated lender: Lendio

Lendio partners with over 75 lenders, which improves your odds and efficiency to get the funding you need.

Qualifications:

Money Approach

$50k in revenue

Calendar Approach

6 mos. in business

Analysis Approach

560 credit score


Lean on local SBA resources

“We received one round of Economic Injury Disaster Loans (EIDL) and two rounds of the COVID-19 Paycheck Protection Program (PPP). While initially confusing, the loan process was made much easier with support from our local Small Business Development Center (SBDC), which I highly recommend as a free service to small-business owners (paid for by your tax dollars).

Our bank made PPP easy, and because we had a small amount to borrow, loan forgiveness on PPP was very simple.”

—Kerri Feazell, CEO, Concurrent Productions

Be patient and prepare for IRS forms

“When small businesses were forced to shut down, we took an Economic Injury Disaster Loan. We sell live insects to zoos and pet stores. When they were forced to shut down, we were concerned that we were going to lose two-thirds of our business. So, we took the loan to help support payroll and other expenses.

The process was fairly easy: we had to submit a loan application to the SBA, as well as a 4506-T IRS form. The process took about a month, but I believe it was accelerated due to the pandemic.”

—Jeff Neal, owner, The Cricket Depot

Small Business Loan Requirements Checklist
Applying for a small-business loan soon?
Our free checklist can help you understand what lenders are looking for.

By signing up I agree to the Terms of Use.

Get collateral squared away ahead of time

“The SBA loan process is fairly straightforward and not too difficult to complete. But what I didn't like was how at the very end, the representative I was working with told me I needed a life insurance policy for collateral assignment. This should have been discussed at the very beginning, and this caused me to 'scramble' to secure a policy in time. Any applicants should be prepared to secure life insurance coverage as it'll most certainly be needed."

—Matt L. Schmidt, advisor, Diabetes Life Insurance Solutions

Consider special loans for disasters and other unique circumstances

“The Small Business Administration (SBA) provides catastrophe loans in the event of natural or economic calamities, such as the coronavirus pandemic. These loans are for businesses that can demonstrate that they have been harmed by a calamity.

Disaster loans of up to $2 million are offered with repayment terms of up to 30 years. They can be used for working capital, day-to-day operational costs, and property replacement. Unless you're looking for coronavirus assistance, your business must be located in an SBA-declared disaster area to qualify for a disaster loan."

—Jason Feldman, attorney and founder, Immigrate Me

Embrace smaller amounts of funding

"Small companies and charity child care facilities with low working cash needs may benefit from microloans. A microloan can be utilized for operating capital, inventory purchases, and furniture or equipment purchases. These loans are managed by nonprofit organizations that have been approved by the Small Business Administration.

Microloans are not guaranteed by the SBA, unlike other types of loans. Microloans of up to $50,000 are available with six-year repayment terms. A minimum credit score of 640 is required to qualify."

—Gerrid Smith, chief marketing officer, Joy Organics

Time is on your side when repaying SBA loans

“We received an EIDL loan at the beginning of the pandemic and were able to use those funds to get a better office and new computers!

The process was fairly simple. We filled out the forms with all of our business/revenue data and, after about four weeks, were eventually approved and the money just showed up in our bank account. Then about six months later, we were contacted by a loan officer to make sure they had all of our tax info on file.

I would recommend a loan from them because it’s essentially free money, with no interest or payments for the first year. Plus, you have 30 years to pay it back at a 3% interest rate. If you’re looking for capital to grow, that is a good route.”

—Sal Rosenblatt, president, Shout Me Out Marketing

Need help getting a loan?

Related reading:

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

Ian Agar
Written by
Ian Agar
Former Business.org staff writer writes about human resource administration. His work has been featured in The Motley Fool and Yahoo! Finance.
Recent Articles
Lendio, Fundera, and Funding Circle offer some of the best small business loans
Best Small Business Loans of 2023
If you’re in the market for a small-business loan, you’re in the right place. Best...
6 Ways to Self-Finance Your Business
Even if you have a great business idea, it is unlikely to succeed without solid...
Business owner looking at tablet
Breaking Down Business Startup Costs: What to Expect
When starting a business, it can be tough to estimate all the costs. We researched...
Lendio, BlueVine, and Fundbox offer some of the best small business loans for women
10 Best Small-Business Loans for Women in 2023
Female business owners get rejected for loans at higher rates than their male counterparts.1 These...