Can You Take Out Multiple SBA Loans?

By Roberta M. Fisher, Gadd Business Consultants

Access to capital is a critical part of having a small business.  A loan can assist you with cash flow issues, hiring new employees or expanding your product lines or services.

COVID-19 has made a time of uncertainty for small businesses and made financing even more crucial.  If you are experiencing shortness of funds to sustain your business or at the least to recover from the last several months of closures, you have options. 

The most common and used options are using credit cards, lines of credit and the use of outside investments. 

Times like today makes taking out more than one loan at a time necessary to meet your obligations as a business owner.  Many find themselves taking out more than one Small Business Association (SBA) loan since the terms of the loans are more promising than many other financing options.

Yes you can apply for multiple/unlimited SBA loans but, doing so can come with limitations and risks.  The risks of taking on multiple loans can hurt your Balance Sheet.

There a few things you need to know about taking out multiple SBA loans such as:

  • They must be used to cover working capital needs or fixed assets
  • Immense help in acquiring financing from a bank, community development program or microlender
  • SBA loans are harder to qualify for (need excellent credit score typically 680 or above) and a solid business financial
  • Provide collateral for each additional loan
  • Excellent standing with your current SBA loan

There are three types of SBA Loans available according to your needs:

  • SBA 7(a) loans- This type of loan is offered for up to $5 million and can be used for a variety of business purposes.  It is also the most popular and provides broad funding solutions and specialized options for a wide range of businesses.
  • SBA 504 loans – This loan offers long-term fixed rate financing up to $5 million for businesses that are part of a community to obtain fixed assets.
  • Microloans – This loan allows for up to $50,000 and is available for smaller businesses to fund for their general business needs.

The main benefit for taking out more than one SBA loan is access to additional capital with the best terms.  SBA loans typically offer the following:

  • Larger loan amounts
  • Lower down payments
  • Lower interest rates
  • Longer repayment terms

Along with the benefits there are some drawbacks when acquiring multiple SBA loans.  The most important drawback is the risk to your balance sheet balance.  Seasonal businesses will have a harder time making the monthly payment.  This can place your personal assets in danger. You will still be subject to SBA’s borrowing limits.  If you need to borrow more money, you may have to apply for different types of SBA loans. 

Remember to never take on more debt than you or your business can handle to pay back.  If you fail to meet the monthly payments this will cause damage to you credit score and risk to your personal assets.

Reference: Working Capital (