Small business association loans are available through banks and your local district office. Before committing to an institution, consult multiple banks as well as your local government. Hundreds of SBA loans exist and each is designed to cater to a specific sector or type of business. For instance, there are some that focus specifically on start-ups, veteran affairs, debt relief or even export assistance. While researching, find banks and credit unions that are Certified SBA Lenders or CLPs. Preferred Lenders are also a great option. Consult with your district office to find the perfect SBA loan and lender for you. The office can help you significantly decrease your search time as well as ensure you find a reputable institution.
Set and Achieve a Funding Target
Put together a realistic budget for the next year to year and a half, because this is the best way to determine how much money you need. Even if you know exactly what you intend to spend the funds on, your prospective lending partner will want reliable evidence. Gather projections regarding expenses, interest, capital expenditures, cash flow and expected revenue. Do not forget to include existing debt. If you have any other types of loans, consider consolidating them with one banking association. Once the lender sees a reflection of true necessity, they will be more inclined to approve your SBA loan.
Research Your Options
The most common SBA loans are the 504, 7a and Express options. The 504s are generally reserved for company owners who want to finance commercial real estate. If you plan to buy or occupy more than half of the space, you can qualify for this loan. The 7a does not require commercial property ownership. Instead, this option is best if you want to cover working capital expenditures as high as 5 million dollars. The Express loan is very similar to the 7a expect that its maximum is around $350,000. Cash is the determining factor when it comes to acquiring loans so make sure your cash flow is in good shape.
Write Your Application
Be up-to-date on your all your tax filings. Standard procedure dictates that lenders must review your tax returns over the past two to three years. The returns serve as a means of verifying expenditures, cash flow, revenue and other aspects of your balance sheet. Apart from credit history and banking statements, taxes are the most dependable indication of your business’ financial health. Should you require a SBA loan but have an unsatisfactory financial history, be prepared to explain when happened and how things will be different in the future.