Tips on Preparing to Apply for a SBA Loan
Securing a loan isn’t always easy, but there are some options that are more accommodating for small business owners. An SBA loan, or small business loan, can help you manage expenses and grow your company. Before you apply for a loan, here are some tips and requirements to help you prepare.
Provide Information on Your Business
SBA loans are designed specifically for small business owners, especially those who are just starting out. Bank loans are typically harder to get for new entrepreneurs, which is why SBA loans are offered by outside lenders. You will still need to provide basic information about your business, so that your lender can be confident in the risk they’re undertaking.
Be prepared to show proof of any required documents such as licenses, leases and registrations. You should also convey your marketing plans, an outline of how your business is organized, the state and projections of your finances and some basic personal information. Before you apply for an SBA loan, make sure you’re able to communicate some valid reasons for needing one. Indicating possible areas of growth in your business plan that require extra funding will encourage your lender to get on board.
Demonstrate Ability to Repay
While SBA loans exist to support small business owners, lenders still like to be assured of mutual benefits. There are a few ways you can demonstrate your ability to repay on a loan. This step is particularly important for startup businesses that likely don’t have a lot to show for yet. First, it’s important to have a good credit history. A track record of smart money management is a sign of continued success for you as an owner, and for your lender. Also be prepared to provide past credit reports, tax returns and a debt history.
You should also demonstrate that you’re ready to start making monthly payments, and pay interest on your loan. This is especially relevant for established businesses that can provide documents such as past balance sheets, bank and cash flow statements, tax returns, debt schedules and information on profits and losses. It will be easier to a secure an SBA loan if you can prove that you’re able to afford one.
Applying for a loan requires organization and diligence. There may be a lot of prep work involved, but a thorough application will mean less waiting time. Get all of your documents in order to efficiently apply for and secure an SBA loan for your business.