Applying for an Small Business Administration (SBA) loan can be difficult; however there are four primary steps that you can follow that will help you in any SBA loan application. Here we will show you how to apply for an SBA loan by means of figuring out your eligibility, finding the appropriate SBA lender, gathering your documentation, and submitting your SBA loan application.
The SBA loans offer working capital loans as much as $350K and commercial real estate loans as much as $5M. SBA loans have 10-25 years of terms and 5.75% fees. Plus the online application process can have you prequalified in minutes and get you funded in weeks. Here are the four steps you’ll normally need to take when applying for an SBA loan:
- Determine Your Eligibility
The primary step when getting to know how to apply for an SBA loan is to determine whether or not your small business is eligible for the funding you are looking for. There is no sense in wasting time on a prolonged application process in case you don’t meet the minimal requirements. You will normally need to meet both preferred SBA borrower requirements and certain eligibility requirements for the SBA funding program.
- Find an SBA Lender
In case you meet the above requirements, the next step when applying for an SBA loan is to find a lender that will originate and service your loan. Finding an SBA lender means reaching out to direct lenders like banks, brokers and credit unions. The right one for you will depend on your current banking association, how much you are looking to borrow, how quickly you need funds, and what you intend to use the funds for.
Good to Get a Direct SBA Lender
Generally, it is a great concept to find a direct lender that often works with SBA loans. These lenders are more likely to approve your loan application and normally understand how to manage any unique situations you may have due to their experience. Direct lenders can consist of traditional banks, credit unions, or other traditional lenders.
Ensure the lender is part of the SBA Preferred Lender Program (PLP). PLP lenders are SBA loan providers that have experience in and track record that the SBA actually offers them more flexibility to process loans quickly.
Here are some questions that we recommend you to ask your lender;
- What is your total SBA loan amount?
- What is your common SBA loan size?
- Do you participate in the SBA Preferred Lender Program?
- How familiar are you with the SBA 7 a borrowing/lending process?
- How much time does it take to get pre-approved?
- How much time it will take to get funded?
- What are the policies on collateral for an SBA loan?
- Will I need to pay a down payment?
- What are the approximate interest rates?
- Assemble and Organize Your SBA Loan Paperwork
Once you have picked an SBA lender, you must start to collect the documents that are required in your application. The major documents that are required for an SBA loan include;
- Loan Amount
- Business Financials
- Profit and Loss Statements
- Balance Sheet
- 1-3 Years of Projected Financials
- Proof of Ownership
- Business License/Certificate
- Loan Application History
- Last 2 Years of Business Tax Returns
- Last 2 Years of Personal Tax Returns
- Personal Financial Statement
- Owner Résumé
- Business Overview and History
- Business Lease
- Fill out SBA Loan Application
SBA loan applications vary lender by lender; however they normally request basic information about your small business and the objective of your loan request. According to the Small Business Administration, this information part should include:
- Executive summary
- Business profile
- Ownership breakdown
- Management experience
- Explain how the funds will be used
- How the loan will be paid back
You SBA loan application should consist all the above mentioned information when submitting your documentation for the loan. Moreover you also need to fill some type of forms depending on your business and personal situation. These four steps will definitely direct you the right way to get the SBA loan in best possible time.