“SBA requirements” covers three different things: what makes a business eligible, what conditions SBA puts on the loan, and what the lender has to put in the credit file. They are not the same list, and a borrower who satisfies the first two can still be turned down on the third. This page separates them and cites the rule behind each.
A business must be an operating, for-profit business located in the United States, small under SBA size requirements, not an ineligible type of business, unable to obtain the desired credit elsewhere on reasonable terms, and creditworthy with a reasonable ability to repay. On top of that, SBA normally requires personal guarantees from holders of at least 20 percent ownership, may require appraisals, a survey or a feasibility study, and requires hazard insurance on collateral above $500,000.
| Operating business | The applicant must be an operating business, not a passive holder of assets. |
|---|---|
| For profit | Non-profit entities are not eligible borrowers. |
| Located in the U.S. | The business must operate in the United States. |
| Small | Small under SBA size requirements, tested against the industry size standard or the alternative size standard at 13 CFR 121.301. |
| Not an ineligible type | Certain business types are excluded by regulation. |
| Credit elsewhere | The applicant must be unable to obtain the desired credit on reasonable terms from non-federal, non-state and non-local government sources. |
| Creditworthy | The loan must be so sound as to reasonably assure repayment (13 CFR 120.150). |
For 504 specifically, SBA adds qualified management expertise, a feasible business plan, good character and the ability to repay, and excludes non-profit, passive and speculative activities.
13 CFR 120.160 lists the conditions normally required on business loans: personal guarantees from holders of at least a 20 percent ownership interest, with discretion to require others; professional appraisals, a survey or a feasibility study where SBA or a delegated lender considers them necessary; and hazard insurance on all collateral for 7(a) loans over $500,000 and 504 projects over $500,000.
The feasibility study condition is the one that catches borrowers by surprise, because it usually arrives after the loan is already in underwriting. What that study has to contain, and who is allowed to write it, is set out in SBA feasibility study requirements under SOP 50 10 8.
For 504 projects the equity requirement is a regulation, not a negotiation: at least 10 percent of project cost in ordinary cases, at least 15 percent where the business has operated two years or less or the property is limited or single purpose, and at least 20 percent where both apply (13 CFR 120.910). The contribution may be land already owned that forms part of the project property, and it may be borrowed if the terms are reasonable and properly subordinated.
For 7(a) there is no single published percentage in the regulation; the injection is a credit decision the lender documents, and start-ups and changes of ownership attract more of it. Either way the injection has to be traceable to a source the lender can verify. The sources and uses calculator is a quick way to see whether the stack balances.
SBA notes that the contents of the application vary with the size of the loan and the lender’s processing method, and that the borrower always works directly with the lender rather than with SBA.
| Situation | What the lender usually asks for |
|---|---|
| Ground-up construction or major expansion | Independent feasibility study plus an as-completed appraisal |
| Start-up with no operating history | Feasibility study testing demand, pricing and ramp-up |
| Special-purpose property | Feasibility study and going-concern appraisal, kept as separate assignments |
| Change of ownership | Business valuation and cash-flow analysis of the acquired operation |
| Market question only, pre-application | An independent market report rather than a full study |
Last reviewed September 2026 · requirements change with SBA policy; confirm at the sources below and with the lender.
Fixed fee quoted in one business day. Independent analysis only — Wert-Berater does not arrange, broker or place capital.
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Wert-Berater, Inc. is an independent provider of feasibility studies and other related services. The firm does not provide financing or equity investment advice, and does not arrange, broker, or place debt or equity capital of any kind.
All appraisal assignments are performed by Bruce E. Jones, MAI, ASA-GC, BCA, CMEA, a member of the Appraisal Institute since 2006, a staff member of Wert-Berater, Inc. and owner of Special Purpose Realty Valuation.