Getting an SBA loan for your startup is really a great way to kick off the ground. SBA loans are setup in 1950’s by the Federal Government to allow lenders to accept greater risk and support small businesses to grow and expand. As SBA loans are backed by Government, there’s single digit interest rate attached with lower monthly repayments. This makes getting an SBA loan as easy as eating a pie.


But unluckily, getting an SBA loan isn’t as easy as it seems. Small businesses have to face several challenges before securing an SBA loan. There’s an SBA loan eligibility criteria which every small business has to follow. And, not every small business is eligible for an SBA loan. Moreover, the SBA loan application process is time intensive with lots of paperwork involved. This means borrowers have to wait many weeks or even months before they get approved for an SBA loan. It also even takes longer than that to receive the funds.

But luckily, there are ways for small businesses to speed up the SBA loan process and secure funds quickly. There are 6 ways that can increase the likelihood of getting an SBA loan for your startup.

1) Update Your Business Records

Before applying for an SBA loan, the primary job is to keep your business records updated. The SBA loan application process will go smooth if you keep your credit reports, tax returns, legal documents and all financial statements (balance sheet, income statement, and cash flow statements) in order. It’s vital for every small business to integrate a system or even use financial software’s to organize their business records. Updating business records is crucial for running a successful small business, but even more significant when getting a loan. You need to ensure your all records are arranged and updated. All the information is correct as the same will be verified by the lender. Any misleading information will end up in your loan application denial.

2) Hold Good Credit Standings

After keeping your business records updated, the next step is to have a good credit rating by making timely bills payment. You need to have the best possible credit before applying for an SBA loan. So, you need to avoid late payments, destituteness, foreclosures, or charge offs. You can also improve your credit score through credit counseling or debt management agencies before applying for a loan. Cutting back your necessary expenses, closing multiple credit cards and using savings to debt payments will help in improving your credit score. Good credit being an important part of the loan process will get you better rates, quick qualification and fast funding.

3) Know Your Loan Purpose

Before applying for a loan, you need to know the purpose and how the loan will be utilized. Do you need it for acquisition or buying new stock? Or, you might need the capital for business expansion? Whatever the purpose will be, clearly present this information to the lender with the specifics of how the money will be used. Lenders need to know what type of loan you need, for how long, how much your business can afford, what security you will offer etc. All these factors will affects the interest rate and repayment terms offered.

4) Show Your Business Cash Flow

As there’s an old saying, “it takes money to make money,” this makes a business cash flow as an important investment evaluation tool for lenders. Every potential lender looks for borrower’s ability to generate cash before approving a loan. If you’re an established business, you need to demonstrate your business cash flow for loan repayments. Lenders will scrutinize your business past tax returns and existing debt. If you’re a startup, you need to show detailed financial projections of how you will make the loan repayments. Poor cash management is the root cause for most business failures. Considering the basic cash flow concepts will assist you plan for the unexpected contingencies and get you quick funding without troubles.


5) Have A Professional Background

Lenders that will be interested in your small business will also look at you personally. Therefore, it’s important to display a relevant professional background and confirms that you’re positioned for success. Your personal character helps the lender in making a prejudiced assessment of your business’s market appeal. So make sure you sell yourself well to the lender. Showcasing your professional background to the lender means showing your previous business experience, any existing or past connection with the lender, recommendation from the community members, professional references, and your struggle in the business planning process.

6) Every Lender is Different

As getting an SBA loan has explicit eligibility criteria, not every lender will have the same process. Shop around to search for good prospects, and inquire about their specific eligibility criteria. Study and learn exactly to whom they lend the money and what documentation, projections and narratives they consider for loan eligible criteria.