SBA loans (backed by the U.S. Small Business Administration) typically offer lower rates and longer terms than a conventional bank loan, but they come with more paperwork and stricter eligibility requirements. Here’s what actually gets checked.

Core eligibility requirements

Operate as a for-profit business physically located and operating in the U.S.
Meet the SBA’s size standards for your industry — these vary by sector, not a single revenue or employee cap
Have reasonable owner equity already invested in the business — lenders want to see you have skin in the game
Show you’ve exhausted other reasonable financing options first, since SBA loans are meant to fill a genuine financing gap

What lenders look at closely

Personal and business credit history
Cash flow sufficient to cover the new loan payment on top of existing obligations
A clear, specific use of funds — vague plans get scrutinized harder than a concrete equipment purchase or expansion plan

Before you apply

Run your numbers through a debt service calculation first — lenders will check whether your projected cash flow comfortably covers the new payment, and you should know the answer before they ask. It also tells you honestly whether the loan actually solves your problem or just adds a new monthly obligation on top of an existing cash flow issue.