Business Insights

Don’t Qualify for an SBA 7(a) Loan? – Some Alternative Options

Elizabeth Wisniewski
8 Minutes to read
Man next to quote "Not Eligible for an SBA 7(a) Loan? "

At NEWITY, we aim to help small business owners get access to the capital they need to grow. Obtaining funds for business expansion can be challenging if you’re not approved for the type of capital you wanted.   

While our focus is to help entrepreneurs secure SBA 7(a) loans, if your business doesn’t qualify, we can assist with other financing options like term loans and lines of credit. Continue reading to learn more about the differences between SBA 7(a) loans and other small business funding options. These options include term loans and lines of credit, which are available in our portal.

SBA 7(a) Loans

The Small Business Administration offers 7(a) loans through bank and non-bank lenders. SBA 7(a) loans are government-backed with favorable interest rates and payment terms that are different than traditional business loans. At NEWITY, we can help your small business secure an SBA 7(a) loan up to $250,000. The benefits of SBA 7(a) loans as compared to alternatives are:

  • Built for businesses who might struggle to obtain capital  
  • Eligibility and documentation requirements are consistent   
  • Low interest rate and long repayment term  
  • No SBA guaranty fees for loans less than $1 million  
  • Flexible in allowable spending   
  • Small balance loans available   
  • Higher likelihood of approval 
  •   

 The SBA’s 7(a) program encourages banks and non-bank lenders to provide loans to small businesses that are not able to obtain financing on reasonable terms and conditions. The eligibility requirements for an SBA 7(a) working capital loan through NEWITY are as follows:    

  • In operation for at least one full tax year as a for-profit business    
  • U.S.-based location and operations    
  • Owner-supported, owner-funded    
  • Meet the SBA’s basic eligibility requirements (if you had a PPP loan, you likely qualify) 
  • Minimum FICO score of 675 for majority owner 

 

"What if I Don't Qualify for an SBA 7(a) loan"?

Don’t worry! NEWITY works with different lenders to find the best financing option for your small business. Submit our brief prescreen application and we will present you with the most competitive financing option for your business, whether it is an SBA 7(a) loan, term loan, or line of credit.   

What is a term loan or line of credit?

Term Loan

Term loans allow small businesses to borrow a set amount of money that must be repaid within a certain time. The repayment amount and timing depends upon an agreed-upon interest rate and schedule. Term loans are the most traditional form of loan for small businesses.  

Unlike SBA loans, term loans may require a substantial down payment to reduce the payment amounts and total cost of the loan. Small businesses commonly use term loans for equipment, real estate, or working capital. 

Line of Credit

A line of credit has a preset borrowing limit that you can use at any time while the line of credit is open or until you reach the borrowing credit limit. Lines of credit have built-in flexibility, allowing you to take out only as much as needed. A line of credit is a revolving account that lets you spend, repay, and spend again in a cycle.   

Be aware that there are different types of lines of credit available, including secured and unsecured lines of credit. To use a secured line of credit, you need to provide collateral, such as business assets, as security for the loan. An unsecured credit line doesn’t need collateral, but usually has a higher interest rate and stricter eligibility criteria.  

A line of credit can be a useful tool for small business owners who need access to funds on an as-needed basis.

How NEWITY can help you Find Capital for your Business, Even if it's Not Through an SBA 7(a) Loan.

With NEWITY, you can determine how much you can qualify to receive in minutes, whether through the SBA 7(a) loan program or our alternative financing options. We’ve recently reduced documentation requirements, only needing 2022 personal and business tax returns alongside the last three months of bank statements to support a loan request. Visit our portal and create an account to get started.

Discover How Much Capital you May Qualify for Today

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

  1. U.S.-based and operated
  2. Owner supported / owner funded
  3. Eligible per the SBA’s requirements

Your loan amount will determined by the business’ average annual revenue, FICO score, and years in business