Many small business owners require additional working capital at some point. One of the first places they commonly seek this funding is with a Small Business Administration (SBA) loan through the federal government. While it is an absolute truth that a small business can get grant money from the government, applicants should be aware that these loan programs are very competitive right now as many businesses are struggling due to the Covid-19 pandemic.
It is important to note that SBA has loan money available, but does not provide this money directly to businesses. It works with SBA preferred lenders. This is an important distinction.
If you decide to pursue SBA lending, the application process has several crucial components. This article hopes to help you learn more about the SBA loan process.
Overview of the SBA Loan Application Process
To start the SBA loan application, you must find a lending institution that partners with the SBA. Ask a bank employee or friend for a referral to a qualified lender. Note that the SBA has several programs; — This can make the process confusing. It is important to choose the right program to avoid wasting time during the application process.
Prepare all the required documentation before approaching a lender, as this can expedite the process. It also shows the lender that you did your homework and are serious about your loan request.
The SBA guarantees most programs, which reduces the lender’s risk. However, it is not a guarantee for 100% of the loan, which means the lender will still assume some risk.
In addition, you may be required to put up collateral for the loan. This could be assets in the business or even personal assets and guarantees. Traditional banks are often the lenders approved by the SBA, so the approval will likely take some time.
The SBA Loan Application Process.
To start, you should understand the loan programs and which is right for your business. The following highlights the popular loan programs available via SBA lenders:
- SBA 7(a) – This is the loan type that most businesses choose because it allows for funding up to $5 million. It is a general-purpose business loan that can be used for legitimate business functions.
- Disaster Assistance – When a disaster strikes, the government understands that it can take time for businesses to rebuild. Luckily, loans for disaster are available to help small business owners rebuild.
- SBA 504 – For the 504 Loan Program, the SBA works with Certified Development Companies (CDC). The loan is split between the SBA, the CDC, and the borrower.
- Export Loans – The SBA understands that getting loans for exporting businesses is very difficult. They also know that exporting is crucial for our growth as a country, and they offer loans to help exporters receive funding.
After you do the hard work of determining if you qualify for an SBA Loan, as well as selecting your Small Business Lender, the next step is to complete and submit your SBA Loan Application. Here’s an abbreviated SBA loan requirement checklist:
- Business Plan
- Amount of Loan
- How It Will Be Used
- Credit History
- Financial Projections
- Industry Experience.
Business Buyers seeking assistance with their 2022 SBA and conventional small business loans are urged to contact Bottom Line Management, found online at https://www.bottomlinemanagement.com
and phone at 470-990-0160. For over 30 years, the Bottom Line financial experts have successfully assisted business buyers to obtain their SBA and/or conventional loan financing, buy their dream business, and smile from the financial freedom and incredible feelings of accomplishment that come from being a small business owner!
Contact Bottom Line Management at https://www.bottomlinemanagement.com
or 470-990-0160 today regarding buying a small business.