Small businesses, especially new ones, may need additional funding in order to run optimally or even fluorish. Whether it’s for renovations or for expansion, a small business loan can help business owners who don’t have sufficient savings or are worried about how a large purchase will affect their cash flow. In order to find the right loan for you, take into consideration the following.
Search for SBA Loans
The Small Business Association has a wide variety of loans any small business can apply for, and the terms and rates tend to be more versatile than conventional loans. For example, if you are a new business or do not have the best credit score, financial institutions are less likely to want to provide funds. However, SBA loans are government-backed, which means the lender is guaranteed a certain percentage of the loan regardless of whether you default, thus decreasing the risk for lenders and making funding more accessible to small businesses. Not every lender will offer an SBA loan, so check with the SBA website to see what’s available to you.
Assemble the Necessary Documentation
Because SBA loans are federally regulated, more preparation and documentation is generally required for approval. First and foremost, you’ll need extensive financial statements dating back several years. Income, debts, and assets that could be used as collateral will all be part of your submission. You may also have to submit your personal financial statements, including your own credit score and bank statements. Lenders want to see that both the business and the management is low-risk.
Prepare for Your Interview
Typically, an interview is part of an SBA loan application. Lenders will want to see how you plan to use your small business loan in the form of a business plan. All business plans will be different for each company, but typically, they’ll have the following:
- A business overview, including industry history
- Descriptions of your goods and services
- Operations overview, including resumes of important staff
- Marketing strategies
- Financial statements and plans
Be specific, and whenever possible, use numerical data. Having all the necessary components and being prepared for your interview helps expedite the approval process. Sometimes, SBA loans can take up to 120 days to receive approval, but if you need funding sooner than that, having all documentation at-the-ready will help.
The right funding can help save your business or even boost it to new heights. Shop around for SBA-backed loans to keep your company as you envisioned it to be.