Small Business Loans for Creative Businesses - ArtSHINE (2024)

FAQs

Is it hard to get approved for small business loan? ›

Banks generally require that you have good to excellent credit (score of 690 or higher), strong finances and at least two years in business to qualify for a loan. They'll likely require collateral and a personal guarantee as well.

SBA lenders, typically banks and credit unions, set their own minimum qualifications, but generally use the following criteria to evaluate loan applications: Personal credit history. You'll need to have good credit to qualify for an SBA loan. Lenders will usually want to see a personal credit score of 690 or higher.

What is the easiest SBA loan to get approved for? Loans under the 7(a) program have a higher acceptance rate. And since most 7(a) loans are for $50,000 or less, it may be easier to get approved for a small amount with an Express loan. But you will still need to meet the minimum criteria to qualify and be approved.

Some of the easiest loans to get approved for if you have bad credit include payday loans, no-credit-check loans, and pawnshop loans. Before you apply for an emergency loan to obtain funds quickly, make sure you read the fine print so you know exactly what your costs will be.

While there's no official required SBA loan minimum credit score from the Small Business Administration, lenders will often set minimum credit score requirements for both personal and business. An SBSS of 140 to 160+ or a personal score of 620 to 640+ are commonly needed to qualify.

Do SBA loans require a down payment? Yes, the minimum SBA loan down payment requirement is 10% for 7(a) and 504 loans, although this amount can vary based on a business's cash flow and collateral. For example, weak cash flow or low-value collateral can increase the down payment requirement to 30% of the loan amount.

Get $500 to $5.5 million to fund your business

Loans guaranteed by SBA range from small to large and can be used for most business purposes, including long-term fixed assets and operating capital.

The most common reasons SBA loans are denied are poor credit, too much existing debt, or insufficient collateral. Other reasons include: Prior bankruptcy. Negative taxable income.

What is the average SBA loan amount? ›

While you can get up to $5 million for a standard SBA 7(a) loan, most borrowers in 2022 took out just under a million dollars at $999,210. The average for all SBA 7(a) loans, including the Small Loan and Express programs, was $538,903. Express loans, which are limited to a $500,000 maximum, averaged $97,097 in 2022.

Any assets you pledge should be worth at least as much as the amount your business wants to borrow. In other words, if you want to take out a $100,000 secured business loan, you may need to provide $100,000 worth of collateral to back the financing.

How much of a business loan you can get depends on your business's annual gross sales, creditworthiness, current debts, the type of financing, and the chosen lender. In general, lenders will only provide loans up to 10% to 30% of your annual revenue to ensure you have the means for repayment.

Annual revenue requirement

Meanwhile, banks typically require an annual revenue of $150,000 to $250,000. If you can't meet annual or monthly revenue requirements, you may need to consider alternative lending. These can include merchant cash advances, invoice financing and invoice factoring.

A down payment for an SBA 7(a) or 504 loan ranges from 10 percent to 20 percent. For loans from banks, credit unions and alternative lenders, you may see down payment requirements that range from 10 percent to 30 percent — and some lenders that don't require any down payment.

Many statistics say that large banks approve SBA loans at rates as low as 20-30%, while smaller banks approve SBA loans at around 40% or less. All this to say: SBA loan approval rates hover at half or below all loan applications that are submitted.

SBA Credit Score Requirements

In that case, you'll generally need a minimum score between 620 and 650, depending on the type of loan and lender. Those with personal credit scores of 720 or higher typically have the best chance of getting approved for an SBA loan.

Yes, it can be easier to get an LLC loan. Some lenders won't lend to sole proprietors. Establishing your business as a legal entity can make it easier to access financing and could even help lessen lender bias, as a recent study in the Journal of Marketing Research suggests.