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How to get SBA loans

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An SBA loan is a loan provided by an SBA partner, structured according to SBA regulations, guaranteed to a percentage by SBA, and provided to small businesses that meet SBA eligibility requirements. That means that in order to get SBA loans, you have to-

1. Be eligible.
2. Find SBA partner lenders.
3. Fill out an application showing you are worth lending to.

The most difficult part of the process of getting an SBA loan is the application portion. It is easy to determine if you are eligible, and even easier to find an SBA lending partner. However, impressing the lender, and showing you are worth taking a risk on, can be the trick. Here are some tips for how to create a great SBA loan application so that you can get an SBA loan.

First and foremost, come up with a strong business plan. Your plan should be able to demonstrate why you are capable of being an industry leader, your experience and expertise, your ability to generate cash flow, repay loans, etc. Make sure it highlights your strengths, and lets the lender know you are aware of weaknesses and implementing changes to fix them.

Next, make sure you invest in your own business. Why should the SBA put faith in your business, and guarantee your loan if you won’t put faith in your own business? Most of the time SBA will require you to put 10-50% owner equity into your business, but show them you can, and want to do so because you believe in yourself.

Check your credit. You will need good personal credit to get an SBA loan, and you want to make sure that you correct any mistakes on your credit report, or explain them in a satisfactory way. Any owner in your small business with 20% or more ownership will have their credit pulled, so check it yourself and be aware of what the lender and SBA will see, and if anything reflects badly, do what you can to clear it up.

Provide collateral. If you want to get an SBA guaranteed loan, you should provide collateral. This can be real estate, cash, machinery, inventory, etc. Collateral has many forms, but you need to provide some, so come up with a plan.

Although you likely highlighted your experience, and personal history in your business plan, the goal is to show the SBA and lender that you are capable of running the business, managing money, and taking your business to success. You will want to show that your management team is qualified and that you are confident in your ability to succeed in your market.

If you want an SBA loan, you have to say how much you want, and what you plan to use it for, and how long you need the money. You should have a plan for the next two years for your business, with estimated financials.

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Posted by DK
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