3 Steps to Qualifying for SBA Loans
As the saying goes, “There’s no such thing as a free lunch.” It’s certainly true when it comes to Small Business Administration loans – you have to put in the work to apply, and of course, make plans for repayment. Here are three major steps towards qualifying for SBA loans:
They say that preparation is the key to success. And research is a key part of preparation. When applying for loans, you need to know what options are available so you can make a quality decision and you also need to know what’s required of you before you apply. Be sure to read all of the fine print regarding the terms and conditions of your prospective lenders. Find out what credit scores, business experience and yearly income meet their minimums since this is the information they use to approve of your loan and decide how much money they are willing to lend you. Also, weigh the pros and cons of different types of loans so that you can find the best fit for your business.
Creating a detailed business plan is vital for any venture – and it’s also necessary when it comes to applying for a loan. Your lenders will want to see a clear description of your company and what it offers, analysis of the industry in which you operate, and your sales and marketing strategies, among other important components of a well-developed business plan. You should be able to show your lenders how you intend to repay your loan as well as how you plan to use the money you’re lent. Essentially, be prepared to explain how you’ll use the loan to increase your profits so that in the end, you’ll increase your ability to repay the loan.
With plenty of research under your belt and your business plan in hand, it’s time to provide your prospective lenders with the paperwork and collateral that will hopefully persuade them to approve your loan request. You’ll need to gather together many documents, including your business license, your resume that should demonstrate corporate experience, and your professional as well as personal bank statements and income tax returns. It sounds like a lot – because it is, so make a list and stay organized so that nothing is missing when you go to meet with your lenders. Finally, carefully decide what you want to use as collateral (if it’s required) and make sure it’s something you don’t mind putting on the line.
As a business owner, everything you do is a learning opportunity. Applying for SBA loans is no different, and these three steps will set you on your way.