10 Tips for Getting Approved for an SBA Loan
Getting a loan for your small business can give you vital resources to expand your operations. However, taking on a new financial obligation shouldn’t be entered into lightly. Here are ten things that you should do if you’re considering a loan.
1. Learn About Small Business Lending
You should make it a point to educate yourself about the application process. Check out some resources from financial institutions and your local small business association.
2. Identify the Best Type of Loan
Depending on your needs, you may want to pursue a line of credit rather than a direct loan. Alternatively, it may make sense to explore accounts receivable financing, a term loan, or an equipment loan.
3. Analyze Your Application’s Strengths and Weaknesses
You need sound understanding of how lenders are likely to regard your application for an SBA loan. When you have a good grasp of your appeal as an applicant, you can make well-informed decisions about terms.
4. Do Your Due Diligence About Lenders
It’s important that you research what different lenders are offering. It may be advantageous to work with a direct online lender, a local community bank, or a peer-to-peer lending sites.
5. Project a Positive Image Online
A lender is likely to look at your company’s online presence. Make sure that your website and social media pages appear well-managed.
6. Organize Your Financial Statements
A prospective lender will be evaluating your application largely based on the way that you present your financial statements. If your company’s financial statements aren’t clear or well-organized, it could hurt your application.
7. Have Ready Access to All Information and Supporting Documentation That a Lender May Request
All of the pro forma components of an SBA loan application have to be in order. Some information that a lender wants to see may not be incorporated into the application itself, so you’ll need to have it on hand if requested later.
8. Give Lenders a Clear Picture of How You’ll Use Funds
Lenders need a thorough understanding of how you’ll use loan proceeds. Don’t rely too heavily on estimates; give lenders a solid account of how you’ll use capital or credit.
9. Choose Your Collateral Well
Collateral may be a determinative factor in lenders’ willingness to work with you. However, you have to carefully consider what you can reasonably offer and avoid overextending your resources.
10. Be Sure You Understand Key Terms
You can’t commit to a loan if you don’t understand its terms. Read all loan documentation thoroughly.