SBA loan collateral

As the loan you mention correctly states, the SBA involvement in business loans is as a guarantor of some percentage of the loan - 80%, for example - not actually making the loan itself. SBA policy is that it does not deny approval for a loan guarantee solely due to lack of collateral; however, it can be used as a reason, in addition to other credit factors.

In general, the SBA places primary consideration on the repayment ability from the cash flow of the business. Since a financial institution actually makes the loan, all of the standard credit policies would apply, such as good character, management capability, collateral and owner's equity contribution.

The SBA does require owners of twenty percent (20%) or more of the business to personally guarantee an SBA loan.