Business Insights

Debunking the Top 5 Common SBA 7(a) Loan Myths

Updated on November 15, 2024
Category: Newsletters

SBA 7(a) loans are becoming increasingly popular as credit becomes more difficult to secure from traditional lenders. However, like many government-sponsored products, there’s a significant amount of misinformation surrounding the 7(a) loan program and its benefits. Let’s separate fact from fiction by addressing the top five myths.

Myth #1 — SBA 7(a) Loans Have a Complicated Application Process and Take a Long Time to Close.

Verdict: False

While it’s true that traditional lenders often take more than 90 days to process SBA loans, platforms like NEWITY have streamlined the SBA process. For instance, you can learn whether you’re eligible in less than 15 minutes, and most NEWITY SBA loans are funded within weeks.

Myth #2 — Applying for an SBA 7(a) Loan Impacts Your Credit.

Verdict: False

You can check your eligibility for an SBA 7(a) loan without affecting your credit score. Trusted platforms like NEWITY perform a soft credit pull, which ensures that your business and personal credit remain unaffected.

Myth #3 — SBA 7(a) Loans are Only for Start-Ups and Have Complicated Eligibility Requirements.

Verdict: False

SBA 7(a) loans are accessible to both new and established small businesses. Moreover, the eligibility requirements are straightforward and do not change with market conditions. To qualify for an SBA 7(a) loan through NEWITY, your business must meet the following criteria:

Be in operation for at least one year as a for-profit entity.
Operate in the United States.
Be owner-supported and funded.
Meet SBA eligibility requirements (you likely qualify if you had a PPP loan).

Myth #4 — You Can Only Get One SBA 7(a) Loan.

Verdict: False

Collateral requirements for SBA 7(a) loans depend on the loan amount. Loans up to $50,000 require no collateral. For amounts between $50,000 and $500,000, collateral requirements are similar to traditional loans. Reliable SBA providers like NEWITY will clearly outline collateral requirements before you sign any documents, ensuring you make an informed decision.

Myth #5 — SBA 7(a) loans always require collateral.

Verdict: False

SBA 7(a) loans up to $50,000 have no collateral requirements. For loans over $50,000 up to $500,000, business collateral requirements are similar to traditional loans. Trusted SBA 7(a) loan providers will provide exact collateral details before you sign any loan paperwork so you can make an informed decision.

The SBA 7(a) program is a powerful tool for small businesses. Platforms like NEWITY continue to expand access to this program, empowering the smallest and most underserved entrepreneurs.

To see if you’re eligible for an SBA 7(a) loan, get started in the NEWITY portal.

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Debunking the Top 5 Common SBA 7(a) Loan Myths

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To qualify for an SBA 7(a) small business loan, your business must be: