The Small Business Association is a government agency that offers assistance in many ways to small businesses. One of the ways it offers help is through SBA loans. These are basically loans that you can get through your typical lenders, but they are backed or guaranteed by the SBA. This lowers the risk for the lender, making it easier for small businesses to get loans.
To qualify for this type of loan, you need to meet the requirements of the bank and the SBA. Here are six steps you can follow to help you get approved.
Step 1: Gather Documentation
You should make sure that you have all the documentation that is required by your lender. It helps if you have all your personal information and business information. Make sure to gather all financial documents and identification documents. You may also need statements from all business partners, if you have them. You want to begin gathering documents as soon as possible.
Step 2: Choose a Lender
Choose your lender carefully. You should try to match your business with the right institution in order to improve your chances of approval. It can help to work with a lender that you already have an established relationship with. In addition, smaller banks tend to be more open to lending to small businesses than larger ones, so keep that in mind.
Step 3: Make Sure You Meet the Requirements
You will need to meet the requirements of both the SBA and your lender. SBA loans may have stricter requirements than traditional loans because they restrict loans to only businesses that can’t get traditional loans, that are a certain size and will be using the loan in certain ways. In addition, some types of businesses can’t qualify for SBA loans, like casinos. Lender requirements usually focus on your financial ability and likelihood of paying back the loan.
Step 4: Develop a Concise Business Plan
You should always go in to apply for a loan with your business plan. Your business plan should paint a clear picture of every aspect of your business. It should include details on every facet of how your business operates. Make sure it is as detailed as possible.
Step 5: Prepare a Detailed Financial Report
Your business plan should include information on your finances, but you may also want to make sure you have a financial report that contains the complete history of your business. It should outline everything, from previous loans to capital to assets. It should also contain a forecast of what you expect to occur with your finances in the future.
Step 6: Fill Out the Application Completely
Your final step will be to ensure that you fill out the application completely. Don’t leave anything blank. Ask questions if you don’t understand anything.