How To Get an SBA Loan?
The Small Business Association, SBA, Loan is one that all small business owners have probably heard of before, but how many really understand how they work and more importantly how to get an SBA loan for your own business? If you have been looking for ways to make expansions within your own small business, an SBA loan is definitely worth looking into. While qualifying for an SBA loan can be difficult, the extended repayment terms, lower APR, and loan security are what make it all worth the effort.
SBA loans are not lent directly from the SBA, the approved financial institutions, which are usually traditional banks are the ones doing the actual lending. Therefore depending on what bank you choose to do business with, the SBA loans available to you may differ in terms of repayment terms, loan amounts, and interest rates. However, what will be the same regardless as to where you choose to apply for an SBA loan, are the financial documents required for the application. Most banks will require:
- Business plan
- Personal financial statement
- Three years of business financial statements
- Three years of federal tax returns
- One-year cash flow projection
- Copy of business lease or proposed terms
Once you are able to provide all of these and any other documents the bank may require, there are still a few baseline qualifications that most SBA loans will require you and your business to meet. Keep in mind, even if your business is not currently meeting the following qualifications, that does not mean that your business will not do so in the future. Most banks will require:
- At least two years of documented business history
- A 640+ personal credit score for the main business owner
- At least $100,000 in yearly revenue for your business
- Life Insurance to cover key business owners
Considering an SBA loan for your business is the first step in taking your small business to the next level. Give yourself the opportunity to expand to a second location, implement a new system, or hire the employees that can make change happen. The most important part of the process is finding the SBA loan that will cater to your business needs. Work with the bank that will offer the repayment terms and loan amounts at the rates that work best for you and your business. While doing your research, it is also important to ask questions. You can contact one of our financial advisors with any questions you may have regarding your application for an SBA loan here.