How to Successfully Apply for a SBA Loan
If your business is in need of a small business loan, but aren’t quite sure how to go about it, here are some tips for how to prepare for applying for SBA loan. SBA loans don’t really provide you with actual cash, but they do provide you with backing, so that other lending institutions are more inclined to give you the loan you need.
Locate SBA lenders
You can get information at your nearby SBA district office, but you still need to identify local SBA lenders to begin the application procedure. You can discuss with any of these lenders which type of SBA program might be most advantageous for your company, and of course then start the formal application process.
Choosing the right SBA loan
To help provide you with the background knowledge you need, you should check out the SBA website, where all necessary information can be browsed at your convenience. After you’ve digested all this information, you should have some idea about which type of SBA loan is right for your company, and then you can go to an SBA lender better prepared.
Prepare for your bank meeting
Even with SBA banking, you’ll have to present yourself well to a lender in order to have a fair chance for approval. This means that you’ll have to show a good history of debt payments and credit relationships, you’ll have to be able to demonstrate consistent cash flow, and you have to show a positive ratio of debt to company value. It can also be a big plus if you have collateral in hand which can offer security to a lender.
Having a solid business plan is a must at this stage, along with at least three years’ worth of projections which show company profitability. You are likely to be questioned about various aspects of the industry you’re in, as well as the target market for your business, so you really need to know these well in order to impress a lender. If your company is a startup this is even more critical, because lenders will need to know that you have an understanding of where your business fits in with the overall market.