How to Get Approved for an SBA Loan
Applying for a loan as a small company can be tricky, especially if you have not been doing business for very long because you will not always have the necessary credit history. With the help of the SBA loan programs, however, you can be more easily approved for more funding than if you try to go it on your own.
Time
One of the biggest drawbacks to working with the Small Business Administration loan programs is that it usually takes more time than just working through the bank on your own. This is something to keep in mind when you apply for these programs. For immediate funding needs, such as taking on a bigger project than you are used to, it is a good idea to explore lines of credit or alternative financing instead.
Research
Researching lenders is an important step for any loan to make sure that you get the best terms possible. The SBA does not actually lend you the money with their loan programs, they help you guarantee the loan. This means that if you default, the lender can get some recompense from the government in exchange for offering loans to companies they would normally consider too risky.
Credit
SBA loan programs will rely on the credit score and history of your company the same way that other bank loans will. This means it is important to see where your business credit is at and if there is any way to improve it before applying for a loan. The best way to improve your score and history is by making regular, timely, payments to outstanding lines and loans you may have.
Plan
The better developed your business plan is, the easier it is to get approved by both the SBA and the bank. This means having a detailed chart of where the money from the loan will go, how spending that amount will help grow your business and even projected profits and losses based both on where you are now and where your financing will take you.
Consult
Consulting with financing professionals will give you a good idea of the options available to you and how to improve your paperwork for the actual application. Many banking institutions will have loan officers available to help you through the whole process, including applying with the SBA and preparing the paperwork for the underwriters.
An SBA loan program can help your business qualify for the loan you need to grow into your next phase. Whether you are opening your doors for the first time or moving to a better location, the more you prepare before applying for a loan, the better your results will be.
