For SBA lenders
Short answer
For start-ups, a lender must document a robust analysis of the borrower's management experience, financial projections, industry viability, and a strong equity injection, reflecting the increased risk.
SBA requires lenders to apply prudent lending standards similar to those for non-SBA loans. For start-ups, this means a heightened focus on the principals' relevant experience, realistic and conservative financial projections with detailed assumptions, market analysis, and a demonstrably sufficient equity injection (typically higher than 10%). The credit memo must clearly articulate how these factors mitigate start-up risks.
A lender's credit memo for a new restaurant start-up details the owner's 15 years of restaurant management experience, conservative 3-year financial projections with sensitivity analysis, market demand data, and a 25% cash equity injection, justifying the loan's approval despite no operating history.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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