Multiple SBA Loans: How Many SBA Loans Can You Have?

Small Business Administration (SBA) loans provide arguably the best financing available. These loans come with large loan amounts, low interest rates, flexible spending, and extended repayment periods. 

With terms like these, it's no wonder you're questioning just how many SBA loans you can have. Can your business have multiple SBA loans at the same time? And if so, how many can get you get?

These are great questions, especially considering a single business loan might not be enough to meet your business's financing needs-especially in today's uncertain times.

The good news is, you can take out multiple SBA loans to find your business expenses-there's no limit. However, you'll need to ensure you maintain your SBA borrower eligibility. Here's how.

Maintain SBA borrower eligibility

First, you'll need to meet the SBA's basic loan requirements:

• Operate as a for-profit business
• US-based location and operations
• Owner-supported, owner-funded
• Used other funding options first
• Meet SBA's definition of "small" business
• Operate in an SBA-approved industry

In addition to these fundamental loan requirements, your business will need to meet the SBA's loan standards:

Strong credit score

You'll typically want a credit score of at least 640, but the higher the better. If you're trying to take out multiple SBA loans, then you'll likely need a higher credit score to prove your lending worthiness. 

Collateral for each loan

You can't use the same collateral on multiple loans-in the case that you default on all of them. You'll need to find specific collateral for each individual loan, which can be difficult to come up with if you're applying for multiple SBA loans.

Good standing on current debts

You won't be able to get another SBA loan if you're not in good standing with your current loan(s). Ensure you're on top of all your current SBA (and non-SBA) debts before applying for a new loan.

Robust business plan

SBA lenders want to see your plan to use the funds. They want to see current and predicted revenue and expenses to determine if you'll really be able to pay back multiple loans at the same time. Your business plan will need to convince them that you have a strategy for using the funds to generate profit sufficient to repay your loans.

Potential for long-term success

Lenders need to be confident in your short-term and long-term success. SBA loans can sometimes take decades to repay (as much as 25 years), so lenders will need to know you're going to stick around long enough to pay back your loan. 

Also, keep in mind that individual lenders will have their own requirements, too. Some lenders may have a policy against funding multiple SBA loans for businesses, and others may be more critical of your credit history in these scenarios. For example, while the SBA has no set years in business requirement, most lenders require businesses to be around at least a couple of years before qualifying for an SBA loan.

Pros and cons of multiple SBA loans

The most obvious advantage to multiple SBA loans is securing some of the most affordable, flexible financing available. Loans don't come cheaper than SBA loans, so you'll get access to capital at the best rates and terms.

However, there are a few downsides to having multiple SBA loans:

• Lengthy processes: You'll have to go through the same months-long application, approval, and funding process for each SBA loan. They'll save you money in the long run, but you're trading valuable time on these loan processes.
• Personal risk: If your business struggles to make monthly payments, your lenders could seize your personal assets. If you've put multiple assets up as collateral for your loans, you could lose substantial personal value, like your home, savings, or vehicles.
• Borrowing limit: You're still subject to the SBA's $5 million borrowing limit, even if you have multiple loans. While that's quite a lot of cash already, if you need financing beyond that amount, you'll need to look to other forms of financing.

Regardless of your situation, it's important not to take on more debt than you can handle. Just because you qualify for multiple SBA loans doesn't mean you should apply-sometimes, other financing solutions or slower business growth make more sense.

If you're concerned about how much debt is safe to take on, talk to an accountant or your lender. Want to crunch the numbers and estimate your monthly payment based on a range of loan amounts and terms? Give our handy-dandy SBA loan calculator a try.