Prepare to Apply for an SBA Loan
Getting a loan for either a new or existing small business is going to take a fair amount of preparation. Taking some steps to get organized in advance of applying can make the process go a lot smoother than it otherwise would. Here are some things that small business owners should know about seeking approval for an SBA loan.
Review Your Credit
One of the first things that lenders will consider in evaluating a loan application is an applicant’s credit history. It’s relatively common for small businesses to have less than perfect credit. As new enterprises are getting off the ground and taking form, the path to profitability isn’t always straightforward. Many businesses that go on to become very profitable in the future have some setbacks as they ramp up their operations. New businesses won’t have much or possibly any positive credit history to support their application. In this scenario, a business’ principals will likely need to provide some information about their personal credit. Lenders need to be satisfied with what they see whether they are looking at a business’ credit, principal’s credit, or both. Applicants for SBA loans should review their credit scores as early as possible before applying to find out where they stand and address any potential issues.
Organize Financial Information
Lenders want to see that applicants are exercising methodical financial management practices. The information that applicants present has to appear well-organized, and it should reflect attention to detail. Forward looking statements should have some factual basis and must not seem purely speculative. Projections should have substantive material backing them up.
Find Receptive Lenders
Small business owners may find it advantageous to seek out lenders who are experienced granting SBA loans to similarly situated businesses. Insight into the dynamics and intricacies of a particular field gives lenders good insight into how a business functions. They will also have a good eye for assessing economic health and the viability of certain development plans.
Ultimately, small business owners have to remember that the process of getting approval isn’t instantaneous. The sba lending program may involve a few more hurdles to jump through than other lending and financing options. However, the program’s benefits can certainly make the administrative and organizational efforts that go into the application process well worth it. The sooner applicants work on applying, the more leeway they’ll have to explore the best opportunities that will closely fit their individual needs.