Solopreneurs can find it challenging to secure the financing they require to take their projects to the next level, but SBA loans may offer a solution. These lines of credit from the Small Business Administration (SBA) supply key funding, allowing you to take on the giants in your segment even as a small LLC. 

Understanding SBA Loans for LLCs with No Employees

SBA loans are government-backed financing instruments provided via private banks and credit unions. The SBA acts as the backstop for them, reducing the risk for lenders and encouraging them to supply more credit to entrepreneurs who require it. 

The SBA provides loans to businesses without employees. However, they must meet various criteria. 

One consideration is business size. The SBA will sometimes factor in the number of employees in some industries (ruling out applications from solopreneurs) but not all. It will also consider revenue – the cash generated – to determine loan eligibility. 

Other factors include: 

• The profit status of your business – non-profits can’t apply for SBA loans
• The location of the enterprise – it should be in the U.S. 
• The degree of owner investment – how much money you put into the company
• Your creditworthiness – whether you honored loans in the past
• Your repayment ability – what you can afford to pay back

SBA loans are useful in numerous LLCs with no employees. For example, they can provide working capital to keep operations afloat during the first few months of trading or finance the purchase of premises. 

Small Business Loans: Options for Sole Proprietors

Sole proprietors and solopreneurs can apply for various forms of SBA loans, which vary according to business requirements. 

Microloans

Microloans are for small companies and startups. The SBA usually lends under $50,000 to brands in this category – enough for three to six months of operations. 

CDC/504 Loans

You can also apply for CDC/504 loans to buy equipment or purchase premises for your business. These come with predictable, fixed-rating financing, similar to mortgages. 

7(a) Loans

7(a) loans are the SBA’s general financing option, offering more flexibility than microloans or CDC/504 funding options. Solopreneurs and business leaders can use these for just about anything business-related from marketing to hiring staff. 

Loan Opportunities for Independent Contractors

Loan opportunities are available for independent contractors, including the SBA 7(a) and the microloan program. These provide funding for working capital and equipment funding. The former can provide up to $5 million while the latter typically disburses around $13,000. 

To apply,  independent contractors should: 

1. Prepare a business plan explaining how they will use the funding. 
2. Collect documents proving creditworthiness, income, bank balances and P&L
3. Find a lender associated with the SBA Loan scheme
4. Fill out the application and submit the requested financial documents
5. Wait for confirmation

Usually, if you have business acumen and a proven track record, you will qualify for a loan. However, getting the application right is essential. 

We Can Help!

That’s where American Capital Express can help. We provide information on the best loan types for businesses without employees, securing optimal funding for your requirements. 

Contact us today to discover how we help!