The Small Business Administration (SBA) has a simple, heartening mission: to secure financing for small businesses that might not otherwise be able to obtain it, but that still have a good chance of succeeding. True to this mission, some SBA loans have less stringent requirements for owner's equity and collateral than do commercial loans, making the SBA an excellent source of financing for start-ups and young businesses.
The most basic eligibility requirement for SBA loans is the ability to repay the loan from cash flow, but the SBA also looks at personal credit history, experience in the industry or other evidence of management ability, collateral and owner's equity contributions. If you own 20 percent or more equity in the business, the SBA asks that you personally guarantee the loan. After all, you can't ask it to back you if you're not willing to back yourself.
Here's a breakdown of the SBA's various programs: