Qualifying for an SBA loan can be difficult. From first-time business owners to small businesses looking to expand aggressively, many businesses can utilize the funding available through the Small Business Administration. Whether you need a few thousand dollars to get your company off the ground or you need to purchase a new building for your expanding enterprise, here are some tips to improve your chances of qualifying for SBA loans.
Before you take the time to fill out an application, you need to research lenders in your area carefully. Although the Small Business Administration is responsible for these loan programs, every lender has their own application process and requirements. Choose a lender that is willing to work with you and has an easy application process that is designed to help you understand what’s involved. Some lenders are more willing to help you with your application, while others offer easier application requirements or higher loan limits.
Next, do everything you can to improve your credit score before applying. SBA loans are typically more lenient than traditional bank loans because they understand that new small business owners may not have the excellent credit rating and proven track record they need. However, these loans are still determined in part by your credit score, so a higher personal credit score gives you a better chance of receiving the loan amount and terms you want.
Your business needs an organized, in-depth business plan to prove that you understand the risks involved in starting a small business. Too many business owners jump into a risky situation without understanding the odds. Your SBA loan lender wants you to pay back the loan in full, so they are more willing to lend to individuals who have a firm plan in mind for growing their business and earning a profit. Create financial reports, projections, a company mission statement and a detailed plan of how you plan to grow your company and minimize risk.
Finally, don’t be afraid to reach out for help. Whether you ask your lender, an investor or an expert in your industry, there’s no shame in discussing options with someone you can trust. Lenders and investors are highly motivated to help you succeed, so if you trust their judgement in your field then you can trust them to help you make the right decisions when it comes to choosing the best SBA loans for your small business.