How to Make Sure You Can Secure an SBA Loan
If you’re applying for a small business loan, there are tips and tricks to help you prepare. The Small Business Administration guarantees loans through approved lenders. For instance, a lender will offer a small business owner a loan and the SBA will back a percentage of it. This, in turn, takes some of the risks away from the lender. Now, in order to secure SBA loans, there are a few tips that you may want to follow.
Talk to Your Current Bank
Before you look for a new bank or financial institution to loan you the money, you should go to your own bank. Approach the financial institution that you do business with and inquire about an SBA loan. This bank will have firsthand knowledge about you and your history. Now, if your bank decline, that’s okay. There are still other opportunities! Just use this as a reason to shop around. Some lenders only specialize in a specific type of loan. Therefore, even if you don’t qualify for an SBA loan at one lender doesn’t mean you won’t qualify with another.
Show Your Business Plan
Have your business plan ready to show the lender. During that initial visit, the lender will want to see the business plan. Make sure that your business plan is drafted well. You want to make sure that it is comprehensive and that it describes your business entirely and explains why it might be successful. You want to include a financial plan, management plan, operations plans, and a marketing plan. It’s important that you have a financial plan that includes a thorough analysis. You don’t want to forget anything if you hope to qualify for SBA loans. Make sure you have a detailed cash flow statement and are able to explain how you will pay back the loan.
Follow the Three Cs
The three Cs are simple. These are credit, collateral, and cash flow. You want to make sure that your credit score is in the right range, that you have a healthy cash flow and that you have assets available to pledge to the loan. Your lender will want to address all three of these points so make sure you have something to say about each.
When it comes to SBA loans, most small businesses benefit from them. However, before you seek out a loan, make sure that you follow these tips. When you have a guide, the entire process is a lot easier.