If you are in the market for a business loan you may be considering an SBA loan. However, you may also be wondering how an SBA loan works or how to go about applying for one. There are a lot of common questions that are asked when people are applying for these loans, the following are some of the most common questions and some answers to them.
How Do SBA Loans Work?
The SBA offers a variety of different loans that are intended to help fund small businesses. The SBA backs the loans that banks make to these small businesses and allows the bank to loan money to riskier clients than they otherwise might be willing to take.
The SBA is often the place people who don’t qualify for traditional bank loans. The government helps those who do not have collateral to put up for the loan or those who do not have a long business track record to prove you are “worthy” of a loan.
Who Decides if an SBA Loan is Right for My Business?
Your local SBA district office is a great place to start. They can help explain the SBA loan and why it might help fit your needs. Moreover, if you have been turned down for a traditional bank loan or are curious about an SBA loan, gathering information is a great place to start. The district office can also help you start the application process for a loan if you determine that is the right step for you.
How Do I Determine Which SBA Loan to Take?
There are a variety of different loans offered by the SBA. The loan that is your best fit will depend on a variety of different factors including your business profile, financing needs, growth plans for your business, etc.
Checking out the SBA’s website can offer some great tips on a place to start. The site will walk you through some quick questions about the loan you wish to take and what loans you will qualify for based on the goals you have set forward. If their search tools are not thorough enough for your needs, vising your SBA district office can provide you with more 1 on 1 guidance toward which loan will be best for your needs.
How Should I Prepare for the Meeting with the Bank?
Preparing for the meeting with your bank will be key to getting the loan you need to move your small business along on the right track. You will need to ensure that your credit history is strong (i.e. making payments on time) and that your income-to-debt ratios are in line. Cash flow projections for the immediate future of your business will also determine how much debt you are going to be qualified to take on.
You will also have to ensure that you have good standing with the IRS and that your taxes are up-to-date before you will be considered for more loans.
What Do I Need to Do to Complete the SBA Loan Application Process?
You will need to make sure that you fill out all sections of the application honestly and thoroughly as you can. Understand the key parts of the application to ensure you fill it out as thoroughly as possible. Completing every question to the best of your ability will give you the best chance to have your application approved.
These are some of the most often-asked questions when someone is filing for an SBA loan. Now that you have some basic background information on an SBA loan you can begin to determine if that loan might be right for your business.
For more information about qualifying for an SBA loan, please feel free to contact us here at Flex Capital for more information.