Helpful Tips to be Approved for an SBA Loan
As a new or startup business owner, you may not have the capital needed to operate efficiently. If this is the case, you may look to the SBA – small business administration – to provide the assistance needed. An SBA loan is an appealing option because of the lower interest rates and the longer payment terms offered.
However, before diving in and applying for an SBA loan, it is a good idea to learn more about how to ensure approval. Keep reading for a few tips.
Conduct Research First
If you want a loan from the SBA, you must fully understand your financial situation to secure approval. This includes your credit history and certain risk factors. It would help if you also learned how SBA loans work and what the specific requirements are.
The SBA provides business owners with programs that guarantee loans from certain lenders, but it does not approve loans. You must meet the lender’s requirements to receive SBA loan funding.
Determine How Much You Need
You can choose from several SBA business lending programs. Each one focuses on something different. For example, with an SBA 504 loan, you can receive funds for land renovations and building. With an Export Express loan, you receive funds to expand your export market.
The 7(a) loan program is the most popular option offered by the SBA and lets a business owner borrow as much as $5 million with a repayment period of 10 years. It is smart to figure out the amount you need by creating a budget related to how the money will be spent. This information can be used when talking to a lender and help secure approval.
Understand Your Numbers
To qualify for an SBA loan, you must have good credit and solid financials. Some loans require that you submit a minimum of three years of financial information, including tax returns and bank records. You must prove you can repay the loan before being approved.
Seek Professional Assistance
You must fill out several documents when applying for an SBA loan. Requesting help from a financial expert will make the process less overwhelming and stressful.
An SBA loan offers an array of benefits. Take some time to learn what you must do to ensure approval to minimize the risk and give yourself the best chance of getting the funds needed to grow your business. Being informed and using the tips here are great ways to begin this application process.