How to get the SBA to help you start your small business
There are many different small business associations, most states have one, there is a national one and many more are run by non-profit organizations. Small business associations are designed to provide support to small business owners through numerous resources and experts. While there is a membership fee involved in joining a small business association many small business owners find paying the fee to be well worth it because of how much small business associations can help the small business owner. One of the best things that a small business association or SBA can do is to help you start your small business.
Difficulty rating: Moderate to difficult
The first thing that you are going to need to do is to join your local SBA. You can gain access to the federal government's website at no charge and you can access any information that they can provide for you.
After joining the SBA you can use them for all sorts of information, as long as you know what you are looking for. They cover topics such as small business accounting, tips for starting your business, choosing a name for your business, etc.
Once you have visited the federal governments website you should go to the frequently asked questions section. This section will answer numerous questions and has an entire section devoted to starting your own small business. But something that you need to keep in mind is that the SBA will only provide you with information on how to start a business, they do not provide you with any type of financing or anything else, all they do is provide you with the resources you can use to get the things you need to start your business.
Because most business require some type of financing people are under the impression that they can get this financing through the SBA, but what they don't know is that the SBA does not provide loans for you to start a small business. They will only provide you with the resources that you need for financing your business and they will offer a guaranty to the lender that is financing your loan. But you need to make sure you meet the requirements for funding in order to get the guaranty by the SBA.
The first thing that you must have when it comes to financial requirements for funding is a good credit score. Because you are a start-up business your business will most likely not have very good credit, most likely it won't have any credit at all. Due to this factor the commercial lenders you are seeking a loan from will look at your personal credit score to determine if you can qualify for a SBA loan.
Besides a good credit rating you are also going to have to be able to prove that you have invested a reasonable amount into your small business. The investment can either be cash to buy assets or you can invest actual assets that will be used to operate the business.
The third requirement that you are going to need to get funding for your small business is a cash flow projection.This will show when you expect your income to turn into cash and when all of your expenses must be paid and should be broken down on a monthly basis for the first year after the loan is made. If you are requesting a loan to start up a new small business you are going to need to document all of the assumptions you have made that went into what you estimated for both revenues and expenses and include them in your loan application.
Another important thing that you are going to have to be able to have is working capital, which is the excess of current assets over current liabilities. In order to get a loan you can not have negative working capital because then you are not going to be able to repay your loan.
Another thing you need to get funding for your small business is collateral, as long as worthwhile assets are available; it is usually required but can be overlooked if it is the only unfavorable aspect of the application. Personal guarantees are also required of every person who owns 20% or more of the business, as well as people who hold key management positions