When it comes to getting a loan for your business, the Small Business Administration (SBA) has made it very easy for business owners to get different types of loans. This is due to the fact that when you apply for a loan backed by the SBA, banks are willing to consider the loan because in the event of default a portion of the loan is backed by the SBA.
Here are a few suggestions that will help you prepare for your SBA loan.
- Look Out For Lenders
As a business owner who wants to start a business, it is right to perform a background research about the most viable lenders. It is prudent to look out for lenders that have a good standing and provide SBA-backed loans. Did you know that there are some financial institution that do not provide SBA-backed loans?
Many professionals recommend you to go to different lenders before choosing the most appropriate one. You may need to consider an SBA preferred lender as they can process the SBA loans on a faster pace as compared to other funding sources. Evaluate the interest rates as well as the terms and conditions of different funding programs. Doing so will help make you decide on a funding program with low interest rates and much less strict terms. The easiest way to carry out this is to go to the SBA website and check on the loans and grants tool and compare different lenders.
- Prepare Your Loan Application
In case you are in need of an SBA-backed loan, you have to make sure that your loan application and documents meet all the requirements. Primarily to start with, you have to make sure that you reveal the amount of cash you need and what you plan to apply the cash for. For example, if you need a loan to strengthen your cash flow, mention and explain it. Be short and accurate for a simple and faster loan approval.
There are some problems that also should be included in your loan application such as your credit score. If you have an excellent FICO score, the lender will actually process your loan faster than you even expected. Take into account that the SBA does not directly provide loans; however all loan applicants submit their applications and the lender will forward the documents to SBA for authorization.
- Meet Basics of a Business Loan
Different banks and lenders could be having different demands when it comes to SBA-backed loans. As mentioned before, it is good to opt for an SBA preferred lender considering that they could provide loans much faster. This will turn out as shortening the loan application process for you. But, since all these loans are backed by the SBA, there are some requirements that have to be met by the loan applicant. For example, the loan application form, the list of your assets as well as your personal financial statements.
It is also good to mention in your loan application about where and how you want to spend the loan. You need to reveal how you intend to pay off the loan as well. Meeting all these requirements will help the SBA to approve your loan quickly.
- Organize Your Documentation
For a loan backed by the SBA, you have to make certain that you have all your documents organized. Additionally provide annual financial documents for the last couple of years. This is to evaluate the position of your investment and whether it has the ability to pay off the loan. You need to additionally ensure that the documents are accurate and up-to-date. You can visit the website business.gov for more information about the loan application documentation.
- Interview Preparation
Oftentimes, lenders could ask you for an interview before providing you the loan. Present yourself in a professional way. Make sure every information in the loan application is accurate. Additionally, provide a repayment plan as well. Your business plan need to be clearly defined. SBA also provide guidelines on writing a business plan. Create a business plan under those guidelines so you can easy get approved for SBA loans.