If you are looking for a way to finance your business, you may have already tried to secure a conventional loan. Unfortunately, many small businesses are unable to qualify for such loans. The good news is that your business could be approved for a Small Business Administration (SBA) loan. Read below for tips on getting approved for an SBA loan.
Work on Your Credit Scores
Although an alternative lender may have less stringent requirements than a bank, your credit scores still matter. They indicate how dedicated you are to paying off your debts. Potential lenders will want to know your business credit score. Many may consider your personal credit score, as well, since it reflects your credit and paying habits. If either of these scores is low, start working to repair that as soon as possible. Pay off any debts that you can immediately, and see if you can make payment arrangements with your other creditors.
Be Aware of the Requirements
Before you apply for an SBA loan, make sure you know the requirements of a given lender. Ask whether there are minimum qualifications with regard to revenue, credit scores, and the length of time your business has been operational. Also, you should consult the Small Business Administration’s website to see if they have additional requirements that must be met.
Collect the Documents
Once you know that you meet the minimum qualifications, you should begin to gather the documents you will be expected to provide. These include tax returns, income statements, bank statements, relevant licenses, and leases if applicable.
Create a Plan
To be taken seriously by potential lenders, you should have a strong business plan in place. This document should clearly demonstrate how you intend to use your SBA loan for your business. You can even find templates of business plans on the SBA website. Your plan should include details such as descriptions of both your company and its products/services, information about your management team, a facilities and operations plan, and industry analysis. You should also provide strategies for sales, marketing, and promotions, as well as a SWOT analysis (an analysis of your company’s strengths, weaknesses, opportunities, and threats).
You may need to provide collateral in order to get an SBA loan. This could be any kind of asset that a lender can take if you don’t make the payments you committed to in your loan agreement. You might use real estate or business equipment, for example, as collateral. Even if an alternative lender does not require collateral, you may need to provide a guarantee of a certain percentage of your business if payments are not made.
Getting a traditional loan might not always be possible for a small business. In many cases, an SBA loan may be the answer. Contact Pendleton Commercial Financing today, so we can help you find the solutions to your business financing needs.