How Fundable is Your Small Business? SBA Loan Eligibility Quiz
Are you a small business owner planning to sell in the next decade? Or a serious buyer looking to acquire a business in the next 12-24 months? If so, it's incredibly important to know if that business could qualify for an SBA loan or traditional financing. Why does this matter? Because financing plays a major role in determining the sale price of a business. That is why we've put together this easy-to-use SBA loan eligibility quiz!
Lenders have strict criteria and many businesses fail to meet the requirements for either SBA loan eligibility or other financing options. If you are a seller, this can limit the pool of buyers and decrease the potential sale price, or if you're a buyer, it affects how much you can borrow to buy your dream business.
Before making any moves, assess the fundability of the business with our quiz - it's a critical first step in ensuring an accurate business valuation as well as a smooth sale or purchase!
Why sellers should care about SBA loan fundability
If you plan to sell your business within the next 10 years, it’s time to start assessing your business’s financial health and identifying areas of improvement. Many factors that impact whether a business can secure financing - like customer concentration or outdated financial records - can be addressed with time, but only if you know about them in advance. The earlier you begin working on these key areas, the more attractive and profitable your business will be to potential buyers when the time comes to sell.
Even if you're not selling soon, taking the SBA loan eligibility quiz now will give you a detailed score and insights into what areas need attention, offering you personalized recommendations on how to improve your fundability. Preparing in advance can help maximize your business’s value when it’s time to exit.
Why buyers should evaluate fundability before a purchase
Buyers need to understand a target business’s fundability before making an offer. A business that can’t qualify for bank financing may mean higher risks or require more cash out of pocket, making the acquisition more challenging. In some cases, this lack of fundability can even make a business you love less desirable to you, due to the financial hurdles involved.
Completing the quiz not only helps you gauge a business's ability to secure funding but also provides tools to work with the seller to improve fundability. This gives you the leverage to negotiate a sale price that works for both parties, ensuring the deal aligns with your financial goals.
Key areas to consider in fundability
This quiz will walk you through several important factors, including (but not limited to):
- Debt-to-Income Ratio: Does the business have too much debt compared to its income?
- Cash Flow: Is the business generating enough consistent revenue to cover its debts and operational expenses?
- Customer Concentration: Is too much of the revenue tied to a single customer, posing a risk if they leave?
- Pending Litigation: Are there unresolved legal or regulatory issues that could deter lend
The bottom line
If you’re serious about buying or selling a business, understanding fundability should be a top priority. Sellers can use it as a roadmap to make their businesses more attractive over time, while buyers can ensure they are not taking on a risk they can’t finance. Take the quiz to see where your business stands and what steps you can take next!
Brit is the Cofounder and CMO of SMB.co, where she leads the company's mission to make small business ownership accessible to everyone. Before cofounding SMB, Brit built and scaled marketing engines at high-growth B2B SaaS companies, but it was her firsthand experience watching small business owners struggle to find buyers and navigate exits that sparked the vision for SMB. She cofounded the company alongside Joe Brown and Mike Hillenmeyer to give independent buyers and sellers the tools, data, and support that were previously only available to private equity firms. A certified leadership coach, Brit is driven by the belief that the next generation of entrepreneurs should have a real shot at owning the businesses that power local communities.
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