SBA loans are available to self-employed entrepreneurs. But they may face a higher barrier to entry for having limited credit history, inconsistent revenue or no collateral. And now that any SBA 7(a) loan over $50,000 (rather than $500,000) requires collateral, the bar is even higher.
If you can’t qualify for an SBA loan, other business financing options are available.
How much do you need?
Who qualifies as self-employed?
The IRS categorizes the following under the term “self-employed”:
Sole proprietors.
Independent contractors.
A partner in a partnership.
A member of a multi-member LLC treated as a partnership for federal tax filing.
A single-member LLC that’s treated as disregarded for federal tax filing.
Part-time business owners and gig workers.
Are self-employed SBA loans hard to get?
Lenders may be more hesitant to finance self-employed entrepreneurs for a few reasons:
Sole proprietors and independent contractors, specifically, are personally liable for their business debts and liabilities. If someone sues their business, for instance, their personal assets — not just their business — could be at stake. This makes it riskier for lenders to finance them.
Sole proprietorships and independent contracting businesses may have lower revenue or less collateral to offer since they’re often a business of one. This could make it more difficult for them to prove that they can pay back the loan, plus interest. And it may require more paperwork.
Many banks set lending minimums above what a self-employed borrower needs. In that case, you may try working with an SBA microlender or online lender instead.
Self-employed business owners may lack business credit history. To establish business credit, start by opening a dedicated business bank account and credit card. If you don’t already have one, consider also getting an employer identification number (EIN). It's not required for sole proprietors with no employees, but it helps separate your business and personal identities.
Self-employed SBA loan application documentation checklist
As a self-employed borrower, you’ll need to provide a fair bit of paperwork in the application process. Here’s a list of what you can expect to provide:
SBA Form 1919 (Borrower Information Form). The business plus every owner with 20%+ interest must complete this form.
SBA Form 413 (Personal Financial Statement). This form lists assets, liabilities (standard and contingent) and income. Each proprietor, general partner, managing member or owner of 20%+ equity needs to submit this form.
Personal and business federal tax returns. The rule is typically three years of returns. For self-employed applicants without a separate business return, Schedule C of their personal Form 1040 is the primary income-verification document.
IRS Form 4506-C (for SBA disaster loans) or Form 8821 (for 7(a) and 504 loans). This allows the lender to reconcile your submitted tax returns with official IRS transcripts.
Business bank statements. These, of course, are simplest and cleanest to provide if you already have a dedicated business bank account (and credit card, for that matter). NerdWallet highly recommends separating your business and personal finances. We also consulted three experts from SBA preferred lenders. They all mentioned mixed personal and business finances as one of the top documentation issues that self-employed applicants face.
Business financial documents. You will need to provide a profit and loss statement (P&L), balance sheet and business debt schedule.
Personal guarantee. Every owner with a business stake of 20% or more needs to sign a personal guarantee. This holds these owners personally liable for the debt in the event the business can’t repay the loan.
1099s and client contracts. This requirement is only relevant for independent contractors. It helps you prove recurring revenue when you don’t have a typical payroll history.
There are also a couple of extra items that can strengthen your application, though they’re not required.
An employer identification number (EIN). Even if you’re a sole proprietor or single-member LLC without employees, we recommend getting an EIN. It will help you cleanly separate your business and personal finances. You can apply for one online for free at IRS.gov.
An application cover letter. One expert we spoke with, David Canet, managing director at Connect One Bank, offered this unique recommendation.
Expert on the ground
SBA loans for the self-employed
SBA microloan: Best for small loans and more lenient requirements
An SBA microloan is a great option for self-employed business owners, especially if they’ve been turned down by traditional banks and don’t need more than $50,000 in funding. As of September 2026, the average SBA microloan awarded in the 2026 fiscal year is $16,044, according to SBA data.
SBA microloans are administered by nonprofit, community-based organizations that can also help train applicants in business practices and management. And because the loans are small, the application process may be easier. Applicants may have limited credit history and typically don’t need as high of a credit score as they do for an SBA 7(a) loan. Microlenders do often require collateral, though, along with a personal guarantee.
SBA 7(a) small loan: Best for loans up to $350,000
Funds from the SBA 7(a) loan program can be used for a variety of business-related purposes. SBA 7(a) small loan amounts max out at $350,000 — a ceiling that the SBA lowered from $500,000 in June 2025. And if the 7(a) small loan is for $50,000 or less, the SBA doesn’t require lenders to take collateral.
» MORE: SBA loan collateral requirements
SBA Express loan: Best for quicker application process
SBA Express loans are a type of 7(a) loan for businesses that need quick financing and no more than $500,000. SBA Express lenders can process and approve applications without sending them to the SBA, thereby speeding up the approval timeline. (Funding can still take several weeks, though.)
Additionally, borrowers may not have to fill out as much paperwork as is required for other SBA loans. Express loans require Form 1919, Form 413 (or the lender’s equivalent) for 20%+ owners and a handful of other documents.
SBA loan alternatives
The SBA isn’t the only place that offers loans for self-employed workers. Here are some other options that may have less stringent requirements.
Online lenders
Self-employed business owners who don't qualify for an SBA or traditional bank loan may have luck with an online loan. Online lenders offer options such as term loans and business lines of credit. They often process applications faster and have more lenient requirements. But in exchange for those benefits, you can expect higher interest rates and shorter terms than you’d find with business loans from banks and credit unions.
Caveat: Expect to pay significantly more in interest than you would with an SBA loan.
» MORE: Compare online business loans
Business credit cards
Business credit cards can help build your business credit (depending on the card and issuer) and pay for everyday business purchases. They can also help finance larger purchases (within your approved credit limit). And if you qualify for a credit card with a 0% introductory APR offer, you’ll have multiple months to pay off the balance interest-free. Just make sure you’re able to pay off your purchase before the intro offer ends and a variable APR sets in.
Caveat: If you don’t pay your credit card bill on time and in full each month, you may incur massive interest charges.
Invoice financing or factoring
If you invoice clients and often find yourself chasing payments, then consider invoice factoring or invoice financing. Both give you the option to collect a large percentage of the unpaid invoice upfront from a factoring or financing company, which can help you manage cash flow fluctuations. Once payment comes in, you repay the loan plus a fee.
The biggest difference between the two options is that invoice financing keeps you in charge of collecting the payment, while invoice factoring puts the factoring company in charge of collections.
Caveat: Fees can really add up, especially if your clients are frequently late to pay their invoices. And APRs often reach into the double, sometimes triple, digits. This is likely to be one of the most expensive alternatives to an SBA or bank loan.
Personal loans for business use
Just starting out? You may struggle to get a startup business loan. Many startup loan options come from online lenders, which often charge higher interest rates and offer shorter terms than banks. If you have a strong relationship with your bank and a great personal credit score, consider asking that bank for a personal loan to use for your business.
Caveats: You’re personally liable for the debt of a personal loan, regardless of your entity structure. Plus, a personal loan won’t help you build business credit.
» MORE: Business loan vs. personal loan
Frequently asked questions
Can a sole proprietor get an SBA loan?
Yes, sole proprietors and other self-employed individuals can absolutely get an SBA loan. But they should ensure before applying that they have clearly separated business and personal finances so they can cleanly prove cash flow and business revenue.
Can I get an SBA loan with no employees?
Yes, SBA loans are available to businesses with and without employees. In fact, the application and documentation process may be simpler for a business with no employees, provided your financial statements and tax returns are in good order and especially if you have a clear separation between your personal and business finances.
Can I get an SBA loan as a 1099 contractor?
Yes, 1099 contractors are eligible for SBA loans. You’ll need to prove self-employment income using personal tax returns, a 1099-NEC and business bank statements.
Article sources
- 1.U.S. Small Business Administration. Microloans Lender Report. Accessed Sep 18, 2026.
