The Secrets to Getting a Small Business Loan
Loan approval can be a challenge for small companies for a variety of reasons, but what most of them boil down to is the simple fact that providing the evidence to a lender that you’re a good risk usually requires showing more history than many small companies have. This is particularly true if your business has been operating for less than two years. The government recognizes this issue and has a program designed to help alleviate it by providing assurance to lenders, so they can offer affordable loans to small businesses. These SBA loans have proven to be invaluable to many companies, but you do need to be prepared to get approved.
The first step is putting together your application package. This kind of loan is designed to stimulate economic activity in your area, so you need to be able to show how you will contribute to the health of the local economy. There are a few ways to do this, like demonstrating how you will use local suppliers to stimulate their businesses. The most common demonstration that you will help the local economy is through the addition of jobs, and being able to show you’ll add to the employment base will greatly aid your application’s approval.
You’ll also need to be able to show your company qualifies as a small business under the mandate of the program. To do that, you’ll have to look into the specific SBA loans you’re applying for, because the limitations on real estate purchases are different from the limitations on equipment financing, for example. Ensuring your purchase is qualified and your business meets the size requirements will save you time and frustration later.
You’ll also need to provide a full application package with all the information you’d expect to provide to a conventional loan company. That includes your business plan, company financial statements, credit check, and so forth. This information helps to demonstrate that you meet the basic financial health requirements of the loan, allowing the government to provide the assurance to your lender that makes the loan possible. To speed up the application process, you might also want to look into applying with a preferred SBA lender. Preferred lenders can approve loan applications themselves, without having to duplicate the approval process through the SBA. That makes it possible to get a determination about your SBA loans much faster. It also gives you the opportunity to apply through several lenders at once, increasing your odds of approval.