SBA Loans: Getting Approved the First Time Around
The Small Business Association wants you to succeed, so they offer a range of financing options to help you launch your great ideas. To qualify for SBA loans, you must have a solid credit history and abide by certain application requirements. Here are a few ways to prepare your application and increase your approval potential.
Create a Solid Business Plan
A business plan is a blueprint for your company’s success. It is also a way to convince lenders that you are an intelligent business person with strategies for marketing, sales and operations. The SBA needs proof that you are capable of running a business with strong income potential. A business plan can provide convincing evidence to support your application. If you include a copy of your credit report in the plan, run an audit on your report and dispute any errors before applying for a loan.
Organize Your Financial Documents
The SBA requires certain financial documents to ensure you have adequate cash flow, manageable debt and stable assets. Such documents include income statements, balance sheets and tax returns. This information creates an overall picture of your financial stability and whether you are capable of managing your income and debt intelligently. Call the SBA or refer to their online checklist to make sure you have right documents prepared.
Find the Right Lender
Finding the right lender makes all the difference in the world. It might be advantageous to contact banks or lenders that you worked with in the past, since they already know your history and have your financial information in their system. You may also prefer to work with lenders who specialize in your industry. For example, there are agencies with tailored programs for healthcare professionals, tech companies and bars and restaurants. Of course, it is always helpful to work with lenders who have experience with SBA loans so that their internal processes do not slow you down.
Offer More Cash Up Front
The more you personally invest in your business, the more seriously lenders will take you and the less you will owe in the long run. If possible, gather as much cash up front as you can or be willing to liquidize or offer some of your assets as collateral to secure the loan.
Whether you are starting a new business or looking to expand an existing one, SBA loans can help you launch your goals. Talk to your lender about your needs and how you can prepare a winning loan application.