Tips for Getting an SBA Loan
The SBA, or Small Business Administration, is a government agency that sets guidelines for SBA loans, rather than providing them directly. These loans often offer lower rates and better terms of repayment than those without the SBA guarantee. Here are some things to keep in mind to help you be successful in getting approval.
Check Your Credit Report
Any potential lender for SBA loans is going to review your business credit report during the approval process. Therefore, it’s important that you know what’s in it and clears up any issues, such as debt showing that’s been paid or debt that was never even yours. Clearing up your credit report should be done before submitting your loan application.
Have a Business Plan
A business plan is a blueprint for making sure that you are on track and clear in where you want to take your business. It also assists you in determining how much of a loan you need and how you want to spend it, information that the lender will require. It also provides prospective lenders with the necessary financial information to determine your eligibility.
Gather Business Financial Information
SBA loans are granted to businesses that have a clear plan of how to use them and show that they have a good chance of being able to repay them. Therefore, the most important information that you will need to supply is that of your finances. Among the documents required are balance sheets, cash flow statements, income and loss statements, and tax returns.
Get Your Personal Finances in Order
If you are the majority shareholder or the only owner of the company, your personal finances will likely be taken into consideration. Therefore, you should make sure that your own credit report is in order, as well as having your personal financial statements ready to submit.
Prepare Information on Your Collateral
Lenders want to see that you have collateral– business assets that can be sold to pay off your loan if necessary. This can include property and equipment, in addition to your accounts receivable. Your own personal assets may be requested as collateral but this should be avoided if at all possible.
To improve your chances of approval, get all the above information together before applying for SBA loans. It will not only save you time during the application process but also show that you are a serious business person and prepared to take the necessary steps to secure and pay off a loan.