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

Michigan Business Beat
June 21, 2023 9:00 AM

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SBA 7(a) loans are increasingly popular as credit becomes difficult to secure from traditional lenders. Like many government-sponsored products, there’s a significant amount of misinformation about the 7(a) loan program and its benefits.

  • Myth #1 — SBA 7(a) loans have a complicated application process and take a long time to close.Verdict: FalseWhile it’s common among traditional lenders that securing an SBA loan can take more than 90 days, NEWITY streamlined the SBA process, so you can learn whether you’re eligible in less than 15 minutes. Most NEWITY SBA loans are funded within weeks.
  • Myth #2 — Applying for an SBA 7(a) loan impacts your credit.Verdict: FalseYou can find out if you’re eligible for an SBA 7(a) loan without impacting your credit score. Platforms like NEWITY take a soft credit pull, which does not affect your business or personal credit.
  • Myth #3 — SBA 7(a) loans are only for start-ups and have complicated eligibility requirements.Verdict: FalseSBA 7(a) loans are available to both new and established small businesses. In each circumstance, SBA 7(a) loans have standard eligibility requirements that do not change with changing market environments. To secure an SBA 7(a) loan through NEWITY, your business must be:
    • In operation for at least one year as a for-profit business
    • U.S.-based location and operation
    • Owner supported / funded
    • Eligible per the SBA's requirements (you likely meet this requirement if you had a PPP loan)
  • Myth #4 — You can only get one SBA 7(a) loan.Verdict: FalseSBA 7(a) loans can be ‘stacked.’ Meaning, you can secure multiple SBA 7(a) loans as long as you meet the program criteria. This feature is particularly helpful for businesses that are growing rapidly and only qualify for a small loan to start, but quickly become eligible for more capital.
  • Myth #5 — SBA 7(a) loans always require collateral.Verdict: FalseSBA 7(a) loans up to $25,000 have no collateral requirements. For loans over $25,000 up to $250,000, 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 can be extremely beneficial for small businesses and NEWITY is continuously expanding access to this popular program for the smallest, 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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