Getting Approved for an SBA Loan
Owning a small business is exciting and can be deeply rewarding. For many, the creative freedom and advantages of being one’s own boss are well worth the effort. Ensuring consistent income is often at the top of the list of challenges. Securing a Small Business Administration (SBA) loan can go a long way toward bringing you security and peace of mind. Here are a few tips to make your loan approval more likely.
Check Your Credit
No matter how impressive your plan, a stable credit history — and solid evidence of that history— is essential. You’ll need to provide the loan officer specific numbers to prove that you’re fully capable of paying the loan back. While you’re in the process of applying for an SBA loan, it’s also a good idea to refrain from taking on additional debt.
Know Your Cash Flow
The lending institution will be concerned with your cash flow — both current and recent. Be prepared with your business’ current financial statement, tax returns from the last three years (if possible), and some type of proof of cash flow — including projections. Having all of this documentation will significantly increase your chances of receiving an SBA loan.
Provide Collateral
It’s important to inspire trust when applying for an SBA loan. Being transparent about assets that you’re willing to put up as collateral convincingly demonstrates you’re an applicant who’s credible and dependable. Provide an itemized list to the lender that’s thorough and definitive.
Have a Plan
A business plan/executive summary that’s accurate and polished will make your application stand out. It’s common for lending institutions to receive business plans — but they differ a great deal in terms of quality and comprehensiveness. In addition to laying out the details of your business, how it makes money, and its attractiveness to paying customers, consider highlighting your knowledge of the competitive market and what makes your business unique.
Do Your Research
Lenders vary, as do applicants. It’s worth it to search for a lender who will understand your needs and who has experience with lending to similar businesses. Consulting with professionals who you already do business with is worthwhile, too. Your banker, accountant, insurance agent, and attorney are already trusted advisors — their information and insights will be invaluable as you go through the loan application process.
SBA loans have opened up numerous opportunities for owners who demonstrate honesty, good judgment, and indicators of potential success in their businesses. Consider these suggestions to boost your company’s likelihood of approval.
