List your expected expenses to calculate your Total Project Cost and your required cash down payment.
Usually 6 months of operating expenses.
Note: 10% is the SBA minimum. Depending on your industry and risk profile, many banks may overlay their own rules and require a 15% to 20% equity injection.
When applying for an SBA loan to start a new business, you must present a highly detailed "Sources and Uses of Funds" statement to your lender. This calculator helps you define the "Uses"—exactly how much money you need to get the business off the ground.
By itemizing your equipment, real estate, franchise fees, inventory, and working capital, the calculator determines your Total Project Cost. From there, it calculates the strict SBA minimum equity injection (down payment) required from you.
An equity injection is the SBA's term for a down payment. It is cash that you, the borrower, put into the business. The SBA requires you to have "skin in the game" so that if the business fails, you lose money alongside the bank.
The strict SBA rule is a minimum of 10% equity injection for new businesses (startups) or for businesses acquiring a new company. However, banks are allowed to have tighter credit policies than the SBA. If a bank views your industry (like a restaurant) as high risk, they may require 15% or 20% down.
As a general rule, lenders like to see enough working capital to cover 6 months of operating expenses. Startups rarely break even on day one, and under-capitalization is the leading cause of small business failure. Don't skimp on this number.