Small businesses often require outside financing to maintain strong cash flow and boost growth. The U.S. Small Business Administration offers a variety of different types of loans with favorable repayment terms and reasonable interest rates. Here are the steps to take to obtain an SBA business loan.
Check Your Qualifications
To be approved for an SBA small business loan, you have to meet some basic qualifications. Your business has to be a for-profit company that is based in the United States or U.S. territories. You have to personally own or have equity in the business, and you have to already have accessed other funding sources, including personal resources, before approaching the SBA. The lenders that actually issue the loans may have other stipulations such as a high credit score and a certain amount of time in business.
Determine the Type of Loan Your Business Needs
The SBA issues several types of loans, and the amount of funding you need, the purpose of the loan, and the speed with which you need it will determine the loan that’s right for your company. For instance, you can use an SBA 7(a) loan for working capital, real estate, equipment, and refinancing previous debt. Alternatively, you can potentially get more funding if you qualify for an SBA 504 loan, but you can use it only for real estate or equipment. Other loans are for smaller amounts but you can get them faster.
Select a Lender
The SBA does not issue loans directly. Instead, the SBA partners with lenders, and it is the lender you work with that actually issues the loan. Some lenders handle only certain types of SBA loans. Before you decide, you’ll want to find out from lenders their credit score requirements, the fees they charge, and how long the loan procedure takes.
Complete Your Application
Your lender will inform you of the necessary documentation that you will need to compile. This will include your business license, articles of incorporation, business and personal tax returns, financial statements, and other documents. An SBA business loan application is typically a lengthy process. Even after your loan is approved, it may take up to a few weeks to receive the funds.
For more advice on getting an SBA loan, contact Kasher Capital.