SBA loans are great opportunities for new and locally-owned businesses to access capital. Supported by the Small Business Administration, a SBA loan is usually easier to qualify for than traditional financing. However, that doesn’t mean every applicant is guaranteed approval. Here are 10 tips to give you the best chance at securing a SBA loan.
1. Learn About the Application Process
Understanding the application process is paramount to getting approved. You should be conscious of deadlines, required documentation and legal obligations to make sure there are no delays in processing.
2. Review Your Online Presence
If lenders do an online search of your business, what will they find? Make sure that any websites or social media profiles represent your enterprise as professional and aboveboard.
3. Look Over the Business Plan’s Key Terms
There’s nothing wrong with shopping around. Once you have several offers, compare them to see which benefits your company the most.
4. Determine What Assets May Be Used as Security
Most lenders require some form of collateral. Analyze your assets, such as accounts receivable, equipment or property, that you can offer as security.
5. Have Use of Funds Outlined
When you apply for a loan, you need to request a specific amount. To make sure you’re getting the capital you need, but not taking on unnecessary debt, determine where funds should be allocated.
6. Determine What Information You Need for the Application
One of the best ways to boost your chance of approval is to take an organized approach. Before you start putting your application together, take note of all the information required. You may need to generate reports or access past financial statements to get everything you need.
7. Organize Documents and Gather Financial Details
Commercial financing applications usually require comprehensive financial documents to help lenders make a decision. Keep your documents organized and enlist the help of a CPA if necessary.
8. Be Aware of Your Credit Profile
Your credit history plays a huge role in the approval process; a poor credit history can lead to denial or unfavorable terms. Make sure you’re aware of any problems that may impact your application and determine if there are any securities you can offer to mitigate the negative effects.
9. Look Into Available Lenders
Learn as much as you can about a lender before you sign on for a long-term partnership. There are many financiers out there offering SBA loans and some may offer benefits that better fit your needs.
10. Figure Out Which Type of Loan You Need
Do some research to find out which SBA loan offers the most advantages for your company. If you rush into financing, you may miss out on opportunities.