How To Become A Successful SBA Loan Applicant?

SBA “Small Business Administration” works with different lenders all around the country to offer loans to the people who are involved in small businesses. SBA is an agency that never works directly with the owners of small businesses. It always makes the guidelines related to loans made by its micro-lending institutions, public expansion associations, and associating moneylenders.

With the help of SBA, the risk for lenders related to loans reduces and make it stress-free for moneylenders to access capital, and this situation makes things easier for the owners of small business to get loans. If you are running a small business organization, then it does not mean that you will get an SBA loan easily because it is one of the most tougher and complicated tasks.

However, the loans of SBA sponsors by taxpayer dollars so the application may be dizzy. Applying for an SBA loan usually takes longer times as compared to other loans. Moreover, applying for an SBA loan involves complicated paperwork as well. If you are applying for one, then you need to fill out numerous forms and applications and keep all your documentation together. Let’s discuss below five different steps through, which you can become a successful SBA loan applicant.

First Step: Check your Worthiness

Before applying for an SBA loan, you need to ensure the eligibility of your business. Such loans are only availed by the business organizations that do not qualify to get other loans. Non-qualified organizations for loans must have to follow strict appropriateness requirements for getting an SBA loan. The general requirements for the application of SBA loans include:

1. Excellent and good acknowledgment for all owners of the business.
2. It would be better for your organization if it is US-based, because if you are operating a small business organization in the USA, then it would be beneficial for you to get an SBA loan.
3. If your organization is a US-based small business organization then it might be profitable for you and your organization.
4. Small business organizations that are new in the market are not eligible to get SBA loans. Applying for an SBA loan, your business should be at least two years of old.
5. If you need to get an SBA loan, then you must have to prove that your small business organization tried to get a loan in the past but failed to get funding from different moneylenders.
6. No defaults or delinquencies on governmental loans.
7. Your small business organization would have to meet with the definition of SBA.
8. Owners have spent an equitable quantity of impartiality in the industry.

Second Step: Choose a Program

It has observed that usually, all the business owners go for the SBA 7(a) program of SBA loans, but it is not necessary that it is suitable for your business too. If you want to become a successful applicant of SBA loan, then you need to know about all the loan programs related to SBA. In this section, some of the SBA loan programs are mentioned which can be suitable for your business.

1. SBA 7(a): This program covers seven different kinds of loans related to SBA, but if you analyze this program in general then in this program your small business organization will get a loan of up to 5 million dollars. But for availing the loan your business needs to get qualified for this program and then you will get the loan for approximately any genuine determination.
2. SBA 504: If your small business organization needs to get some assets like equipment, machines or a place for the expansion of business, then the SBA 504 program will be suitable for your business. This program includes down payment of about 10% – 20% and you do not need to apply through moneylender, but you apply through “Certified Development Company”.
3. Disaster Assistance: If your small business organization is suffering from some physical damage and now you need to recover the damage, then this SBA loan would be the best suitable option for your business organization.
4. SBA Export Program: If your business organization runs on a small platform and facing huge difficulties in getting a business loan, then this program is ideal for your business organization.

Third Step: Find a Lender

If you want to become a successful applicant of an SBA Loan then you need to first find the lender for lending money. The reason behind this is that SBA never offers loan itself, always works with lenders who provide the loans to business organizations, and process your application after all the documentation. The lender is the person who sets the requirements of credits and regulates all the things whether your business organization is eligible for an SBA loan or not. If you are running a small business organization and need to become a successful SBA loan application, then you need to find a lender for your business. There are numerous options through which you can find the right moneylender for your business.

Fourth Step: Assembling of Paperwork and Documentations

After finding a referral service and the right lender now, you need to gather all the documents for the paperwork. Requirements of paperwork totally depend on the SBA loan program. If you need to become a successful applicant of an SBA loan, then you need to do your paperwork and documentation properly because it will directly affect your business decision in the future positively or negatively.

Fifth Step: Filing the Application

When applying for an SBA loan then you need to fill an application for the loan. If you become a successful applicant of an SBA loan, then you need to fill the application attractively and effectively. You need to fill the loan application with an executive summary, basic information and details of the business (like a number of employees, address and contact number). Moreover, you also need to provide ownership breakdown in percentage, information related to debt and financing issues and a detailed business plan.

Conclusion

If you are running a small business organization and your organization is two years old or more then it, but still you are facing business financing and funding issues then you need to go for an SBA loan. SBA loan includes proper documentation and paperwork, which is not that complicated than other loan documentation and paperwork. Most importantly, your business needs to be eligible for getting an SBA loan; otherwise, you will not get the loan because of the strict rules and regulations of this program. SBA loan contains four different programs, and you can select the loan program according to your business requirements and situation. However, you still need to provide complete information about your business before availing the loan.