Most businesses, small and large, require additional financing at some point or another. As a small business owner, you have a few options, including SBA loans.
An SBA loan is funding that’s backed by the Small Business Administration, and it’s one of the best options for small business owners. The rates are among the lowest available and the loans offer favorable repayment terms. An SBA loan can help to make your small business dreams come true.
Securing an SBA loan, however, can be difficult. There’s a lot of paperwork involved, and the underwriting process can take a while. Here are a few tips that can help to make things easier.
Review Your Business Plan
Every business should have a thorough business plan. If you don’t already have one, you’ll need it to obtain an SBA loan. Your lender will want to see your business model, as well as how you’ll use the loan to achieve your goals. If you do have a business plan, review it thoroughly, and update any necessary information. You should also make sure to include financial projections (if you haven’t already).
Know Your Credit Score
SBA loans have strict qualifications that you need to meet for approval. One of those requirements is good to excellent credit (at least 620, according to the SBA). While it doesn’t have to be perfect, a higher credit score means a better chance for approval. It also means you’ll get a more favorable interest rate. If you’re below the minimum, there are steps that you can take to improve your score before you apply.
Research Your Lending Options
The SBA doesn’t offer the loans; it only backs them. You obtain financing through an SBA-approved lender. Every lender is different, so you should research your options to find the best one for you and your business. Knowing about your chosen lender and what they require can help things go more smoothly.
Start the Process Early
The best time to start the loan application is before you need the money. The SBA loan process is involved and can take several weeks, if not a few months. The sooner you get started, the easier it will be to have the funding when you need it most.
Getting SBA loans isn’t the easiest process, but it can be done. Prepare early, gather your documents, and do your research. Securing funding with a favorable interest rate and longer repayment terms can help your business become everything you’ve ever hoped it would.