If you're considering taking out a small business loan through one of the Small Business Administration (SBA) loan programs, you'll have to make a number of preparations. Although this may take some time, it'll be worth it in the long run to help you acquire the best loan for your company's needs.
Finding a lender
If you have an established working relationship with one or more of the banks and financial institutions in your area that are known as small business lenders, you can jump right in. Contact their representatives directly to compare and contrast interest rates, terms and requirements so you find the loan that's right for you.
However, if you're not fully knowledgeable of the lenders near you, some research will be necessary. Start by going online to the SBA's website and using the agency's loans and grants search tool. The SBA's list of Community Advantage approved lenders may also be helpful, though there are only a select few of those institutions throughout the U.S.
Finally, if you've settled on a few lenders you think are ideal, it might be beneficial to cross-reference them with the records of the Better Business Bureau (BBB). Doing so may be particularly helpful if you have doubts regarding a lender's reputation.
Preparing to apply for an SBA loan
Nail down exactly what your needs are when applying for a small business loan. Are you seeking an infusion of working capital? Could you use some help in purchasing additional inventory, property, equipment or supplies? Also consider the state of your business' finances – do you need a modest loan or a significant sum? Finally, are your personal and business credit scores at respectable levels?
Some SBA programs will suit nearly any business need, while others are set aside for specific purposes or borrowers. This factor necessitates that you precisely determine what your loan's funds would go to as well as the amount you plan to request of a lender.
Essential basics of the business loan application process
Many lenders will have different specific requirements for your SBA loan application. Even so, since these loans are backed by the federal government, certain uniform documents are involved – the loan request form, list of collateral assets and personal financial statements for all owners (SBA forms, 4, 4-a and 413).
Within these documents and others, you'll need to provide information on how you plan to use and repay the loan you want, data explaining the current and past state of your business' finances, projections for the future and proof of ideal credit standing. When giving this information, you should also make a strong personal presentation – backing up your documentation with a sense of confidence may help convince a lender.