Where to Find an SBA Loan for your Startup Business

Hey guys, this is Kyle at Projection Hub. And today I'm going to be talking about where do you go to apply for an SBA loan if you're a startup. Now, everybody always talks about how it's really hard to get financing approved as a startup, which can be true. There's a little few more hurdles to overcome some, some additional things you have to do to impress an SBA lender or lender, just in general, to get approved for a startup, just because there's more risk, there's no actual, there's no performance data to go off of. And so you're kind of purely making a decision based off of projections and assumptions and things you say you're going to do in the business plan. And so that's in general why it's more difficult, but there are lenders out there and particularly SBA lenders, which is what I'm going to be talking about today that are making loans to startups. And I'm going to talk about where to find those today. So, as I mentioned, my name is Kyle and I've been with Projection Hub for about three years now, helping businesses create financial projections, create business plans for their, their loan applications or SBA loan applications. But before Projection Hub, I was an SBA loan officer for almost seven years. And so in that, my time there, that looked like helping startups. Yes, the SBA lender I worked at did make lots of loans to startups and I would help them go through the application process, review their business plan, review their projections, collect all their documents, take them through that application process. And so kind of have firsthand experience on what we're talking about today. And through my time doing that, I worked with, I worked at what's called an SBA micro lender. And there are hundreds, thousands of SBA micro lenders across the country. You just got to know where to look. And so I'm going to be talking a little bit more about that today and show you several different places you can look to try and find an SBA lender that might lend money to you for your startup. So if at any point you like this video, give it a thumbs up. That really helps us as a fellow small business. If you have any questions, leave a comment down below the video or contact us directly at support at projectionhub.com. If you've got any questions about your SBA application journey for your startup, and if you, if you have any questions or need any help getting started doing that and getting prepared for that. So without further ado, let's go ahead and jump in. All right. So here I'm going to be using our free SBA loan application checklist is kind of a guide, and it's got some links in here that are going to do exactly what I talked about in the introduction. Where would I go if I was a startup looking for an SBA loan? Like where would I apply for one? So there's lots of things in this checklist that we're not going to talk about in this video, but it might be worth it and helpful to you to grab a copy, get it down in the description below. It might be popping up on the screen somewhere as well, but it's got lots of things in here. It talks about different types of SBA loans, where to find one, which is what I'm going to talk about more about today. Typical SBA loan process documents you would need for a startup and lots of things in here. So go ahead and grab your copy. It's full of links and resources and videos and things that are helpful for you in that process. So we're going to spend some time right here, talk about a few of these things. And this checklist, these are resources for existing businesses, for acquisitions, for startups, for all kinds of different SBA loans. So we're going to focus primarily on startups, SBA loans for startups in this video. And as I mentioned in the introduction, when I was an SBA loan officer, I worked for a lender called Bankable. So it served the state of Indiana for SBA loans. So we were an SBA micro lender and we were what's called an SBA Community Advantage lender. We're not going to go into the weeds on what that means today, but essentially we were a micro lender, which you see here, and we were a 7A lender, which you can see here. So these are just different designations of different types of SBA loan programs that essentially a lender can be certified to participate in. There are different funding sources for the lender to utilize. There's different rules on who can apply for what loans and things that you don't need to necessarily be particularly concerned about. You just need to know where to look for who can offer you the best loan, the best fit for you. And so the lender that I was working for was an SBA micro lender. It was also a CDFI, which is called Community Development Financial Institution. It was also a 7A lender. And so, you know, hearing all those things might not matter to you and it really doesn't need to matter to you, but I am going to show you. So the reason I'm going to talk about that. Okay. So maybe I should, the first thing I should say is the most common place people think to apply for a loan is a bank, right? Maybe where they've banked for a long time and, and you should absolutely pursue that route. You know, one of the key things about an SBA loan is typically they require you to have tried a traditional lending route first and not be able to be successful. So it would be declined, right? Go to your banker and say, you know, I want to start a food truck. Can I have a $50,000 loan? And they say, nah, that's, that's not really in our wheelhouse or we don't feel comfortable making that or whatever the reason may be, you kind of need to do that process first before an SBA lender, whether that's a formal decline or at least just a conversation with your lender and they can, they can do that. So you don't need to go apply at 20 banks and get declined by 20 banks before you can pursue an SBA route. Now, many banks also are SBA lenders, but you got to think about it that even though they can lend SBA wise, which SBA programs, which is supposed to, you know, give more flexibility to collateral requirements and different things like that. Because the federal government is supporting that loan a little bit more. Banks still are highly regulated. They, they really want to keep defaults like super, super low, like well under, you know, 1%. And so they're still trying to pick and choose the absolute safest loans that they can make. And that's just not startups. And also a lot of times startups need smaller loans and that's just not a specialty of banks, right? The processes are rigid. They take a long time. They have a lot of overhead. And so they don't spend a lot of time making really small loans. That's just not their sweet spot. And so first of all, that's what I would, that's the first thing I would check. If you have a bank you're comfortable with and you have a relationship with, talk to them first, even if you're not expecting to get approved and don't be insulted if that's not their, their sweet spot. Cause it's not for most banks. Now there are some banks out there that specialize in doing this kind of thing and those will be reviewed, revealed and some of the things I'm talking about here. So just wanted to say that caveat, I'm not really going to be talking about banks as the primary option here. So this is going to be, you've tried the bank route. Now, where else do you go? And the first thing I would, we're going to look at are these two lists here to find a micro lender, someone to the lender that I had worked with for a while. And so first, if you get your copy of this, you can just open up these links or you can search for these online. We're going to come to this nice website called opportunity finance network, which is essentially just a, an organization that connects and brings visibility to these CDFIs, these micro lenders, these different organizations. And what's unique about micro lenders and CDFIs is that they're all over the country and they may lend to a specific city. They may lend to a specific set of counties. They may lend to a state. They might lend to more than one state. They might lend to a specific type of business. They might lend to a specific minority group. They're what's called mission lenders. So they have their specific mission and that's what they go and get their funding for. And then they provide loans for that. Those loans can be for different purposes and different stage businesses. There's a lot of different nuances to it. So one downside, I should say, I don't think it's really a downside, but you may view it this way, is that finding the right micro lender for you just takes a little bit more homework. It takes more research. But the reason I think that that's ultimately a good thing is because putting in a little bit more effort to find a lender suited for you. Your approval chances will likely go up. The structure of the loan will better be, you know, will be better suited for you. It's a more personable experience. So I think the upside, you know, definitely outweighs the time it takes to find the right one. But they have this nice little tool in the Opportunity Finance Network where you can come here and do a filtered search. So if I was a small startup, this is how I would probably fill this out. I would leave that to any, I would go to org type. I would do loan fund. Choose your state. So I'm going to choose Indiana for my example, lending type, and you're either going to do business or micro enterprise, and you can try both to see one produces more options for you. I'm going to do micro enterprise and for kicks and gimbals, I'll just put this up to the maximum amount. So I'm going to filter this. The first thing that I'll point out is you see lenders that are nine. There are CDFIs that are bigger players in that space that lend to multiple states or even nationwide. And those are great lenders. I'm not telling you that they may not be a good option for you, but there it's going to be a little less of a catered experience. Like if you can find a CDFI or micro lender that operates in just your state or just your city, they're going to be much more familiar with the environment that you're participating in and probably be a little bit more connected and community oriented. So I would recommend that first and they're probably have slightly higher interest rates just because they're operating a bigger operation. So as I mentioned, here's bankable. This is where I worked for for seven years. These results are going to give you a website you can go check out a little bit information about them, you know, so I can just go look at the website. And again, I mentioned each lender, each type of micro lender is going to need to have a different lending territory, types of loans they provide, specialties that they work with, and their website should reveal that to you, right? A lot of them, you'll just go to apply right there online if you decide to, but you can learn about the organization. You can see what types of loans they have, right? So you can see that bankable does a small business loan up to $350,000 for startups and existing businesses, the types of terms you can expect. And they have an Indiana black owned business specific to helping that minority group, right? So it's, it's pretty cool. They're, they're great organizations. I would highly recommend checking it out and let's go ahead and go back here. So without getting too far into the weeds, CDFI, as it says here, stands for community development financial institution. That's just like a certification, I think provided by the U S treasury. So it opens up some funding and grant funding sources to those organizations. As an SBA micro lender is a different certification, but many organizations, as it was bankable is a CDFI and an SBA micro lender. So to you, it doesn't make much of a difference to them. It makes a difference because it allows them to find funding sources in different places to support their mission. So that's why they're both included in here because some live on both lists and then some don't. So it just, it just broadens the list of places for you to check. So now this would be the actual SBA certified micro lenders, which the way this is different is just that their funding source is coming from the SBA. So we'll do the same practice. I'll go over here. It's Indiana. And now SBA micro loan program is going to be more structured. So that whole rant, I just went on about how every month, you know, CDFI is different and they have different missions and they have different loan amounts, whoever's on this certified SBA micro lender list is going to have a little bit more, you know, standardized micro loan offering because the SBA sets the rules for that program. So I think it's probably still capped at $50,000 or certified for an SBA micro loan. And so as you can see here is bankable again, and you know, you can again, go to their website directly from here. So this is another place to check out. So that's the first thing I would, would check out is I would check those if you are, you know, probably looking for less than a hundred thousand dollars. You know, if you're, if you're going to be searching for, you know, multiple hundreds of thousands of dollars or millions of dollars, then micro lenders are not going to be the right fit for you. You know, especially if you're looking for less than 50 grand, you're looking for 30 grand, 20, 15 CDFIs and micro lenders are going to be perfect for you. That is exactly where I would go after you've had a conversation with your banker, as I mentioned bankable, they could end up at $350,000, but typically they're probably not going to be approving a $350,000 loan for a brand new startup, but during my time there, we did make some, some larger loans to some startups. So it's not impossible to do that. The next list I'll go to, and we're not going to talk about 504 lenders today. That, that's kind of a different program that is geared more towards, I would say existing businesses that are trying to scale up with like real estate or large equipment or expansions and that kind of stuff. So we're not going to talk about 504s today, but we're going to now talk about 7A. So this is kind of, imagine we have micro lenders as like, you know, I don't want to call it the little leagues to downplay it, but it's just smaller dollar amounts. 7A is going to be kind of next tier up. 7A is going to be what a bank is going to be offering. So if a bank participates in SBA programs, they're going to be offering a 7A loan. You know, you can see it up here, there's more information, but 7A loans can go up to $5 million. There are some lenders like Bankable that they have a special 7A program that allows them to go up to $350,000. So they're not lending up to $5 million, but they can lend more than just $50,000. So 7A is kind of that, that middle. There's community advantage programs, which is what Bankable was. That's what allows it to go up to $350,000. So there's some, there's some different options there, but again, where do we find them? Cause I just went on this rant talking about like, a bank's probably not going to be your, I shouldn't say they're not your first choice. They should be your first conversation, but most banks aren't broadcasting that they want to make loans to startups. You're going to really find the right fit for you. But if you do need more money than a micro lender is probably going to provide the next place I would go after you've talked to your initial, your bank conversation is you've got two links here. One is going to say, if you want, if you want to find the lenders, the second one says, if you want the lenders to find you now, obviously if you want the lenders to find you, maybe it sounds a little bit more appealing cause maybe it sounds like less work for you. Uh, but one thing that I'll warn you, and we'll open up this first, oops, I don't lose my tool there is what you basically do here is you provide your information to this lender match tool provided by the SBA, and then it's going to blast your information to all of these, these seven a lenders across the country, or at least the ones that will match your kind of criteria. And then they will have the ability to opt in to like the information and then contact you, which sounds great, right? Everybody wants to be contacted by that. But what it could result in happening is cause there's a lot of people that just no lender wants to turn down leads. And so they're just going to accept all of them, which means you might end up doing a lot of work to talk to and provide things to a bunch of these lenders that have a very low likelihood of actually approving for financing. I don't mean that as a slight to you. I just mean that as nobody wants to turn down a new application, accepting a new application, but a lot of them probably aren't in the business of approving a brand new startup. That's just probably not their sweet spot. So that's certainly one way to do it. If you would just like to get a lot of conversations going, feel free to do that. But that's what this lender match tool is going to do. It's going to just blast your information out to a bunch of different people and let them kind of contact you and opt in to talking to you. And then you can follow through in those conversations. This last tool that I'll talk about here is actually the tool that we put together and you can access it here, but you can sign up to get access to this tool at the time of recording. I think it's free to sign up, but no guarantees if this video is viewed in a year from now, if that'll be the case or not, but it's certainly worth checking out. But what this tool does is we basically have taken all of the publicly available SBA loan data. So loans that have been made, lenders that have made them, and we organized it and put it in this nice dashboard tool for you to be able to like quickly filter through and do some things. And what this is going to be able to help us do is we can see, so it's one thing to just go to your bank down the street or who you've banked with and just apply for a loan. But the reality is that certain banks have certain specialties and different portfolio, you know, balancing and different appetites. And so they just have preferences on what type of industries are going to lend to. And this is a tool to help kind of identify those. And so let's go through and do some sort of exercise, right? Let's say I'm looking to start a business in Colorado. Let's say it's going to be a full service restaurant. So we can start to see this list change, right? So right now we've got KeyBank, Cross, Cross First and Huntington Bank kind of are the leading loan providers to full service restaurant, all full service restaurants in Colorado. And then if we do one more step here and let's say start up on the leaves to open a business. Okay, so the list changes. Now Huntington jumps up to the top, right? And that's for a little bit of insider baseball. Huntington is a very prominent SBA lender across the country. And so if you are doing, if you're going through this process and you're looking for a bank and a lender and you're trying to do a startup and you process through this and we still see Huntington top, I would contact. They do a lot of SBA loans in there. They just have a great track record, not sponsored or commercial for them at all, just from my personal experience. But you can see how this little exercise changed the numbers, right? So maybe, maybe you live in Colorado and you bank with Midwest One or someone who's not even on this list. Again, still, it's an easy exercise to have a conversation with them, maybe get that initial denial. If you're trying to move on to talk to micro lenders or something like that, but this can be a really great exercise to figure out what bank will even consider if you're going to start a new bank relationship. I would recommend trying to find one who's actually has the most experience lending to your type of business. So you can access all of these things I talked about in the video today. Grab your free SBA checklist. We've got tons of other content. If you want to peruse our YouTube channel, subscribe to the channel. We've got advice on business plans and financial projections are our expertise. So you can learn more about that. You can grab this, lots of SBA loan application stuff. But I hope this video was helpful. If you're planning to start a business or in the trenches of starting a business right now, trying to find a lender, check out these resources and see if that can provide any helpful leads to you. Also feel free, either in the comments down below or just contact us at supportprojectnub.com if you want to explain your unique situation and get some guidance on what we would recommend doing. As I mentioned, I've got several years of experience in SBA and you can see our founder and owner right there, Adam. He was an executive director of an SBA micro lender for over 10 years, so he's got way more experience in this industry than I do. So between us, hopefully we can get you in the right direction and hopefully get your business up and running and that'd be great. So if you like this video, give it a thumbs up, consider subscribing to the channel. We would love that and we'll see you in the next one. Thanks.