The Key Steps to Take Prior to Applying for an SBA Loan
Though many dream of owning their own business, a common barrier is lack of funds. High requirements regarding credit scores, lack of collateral, and documentation can make the idea of applying for a loan daunting. Fortunately, the Small Business Administration (SBA) provides a straightforward path to securing a loan. Though the process of applying and being approved for an SBA loan is exacting, paying attention to a few crucial actions will make a difference. Here are the key steps to take.
Do a thorough investigation of the lenders you’re considering, looking out for those that give out a significant number of SBA loans and have a good reputation. Visit the lenders in person if you can to get a better idea of the “fit.” If you want faster processing of your SBA loan, consider an SBA Preferred Lender. Also, research the terms and conditions as well as the interest rates of the funding programs. The SBA website can help you expedite the process.
Even though SBA lenders vary, there are common requirements. They include a list of financial statements and assets, and how you plan to repay the loan. It’s also important that you let the lender know how you intend to spend the loan. Your credit rating is important, too. Do everything possible to improve the rating so that your loan has a better chance of fast approval.
Preparing your application materials carefully, meeting all requirements the first time. Be specific about the amount of money you need. Be concise. The easier the application is to read, the more likely it will be approved. Keep in mind that the SBA itself doesn’t give out the loans — the lenders forward your documents on to the SBA for final approval.
As you finish preparing your application materials for the SBA loan, make a copy of everything and double-check to be sure that every document pertaining to your business is in one place, and that each is updated and accurate.
Prepare for the Interview
If you’re called for an interview, practice ahead of time to get comfortable and present yourself in the most professional manner possible. Be prepared to back up information with concrete facts. Also, be able to vividly describe your business plan.
An SBA loan can be a boon for your business. Take these steps to increase your chances of securing one.