The Small Business Association’s lending opportunities aim to facilitate financial stability and growth for small enterprises. To qualify for this type of lending option, your business must meet the programs’ core criteria, and you also have to pass muster in individual lenders’ application review processes. Here are some tips for preparing to apply for a loan.
Pick the SBA Lending Model That Meets Your Needs
There are several SBA loan options to choose from. The right loan category for your company largely depends on your individual short-term needs, how much funding you want, and how you plan to use it. Review the different options and their criteria before preparing your application materials.
Do a Self-Assessment of Your Company’s Financial Health
For the most part, lenders want to work with small businesses with a stable track bringing in revenue and meeting payment obligations to creditors. Go over your business’s most recent financial statements and identify recent developments in your expenses or cash flow that could give lenders pause. Your credit score is going to be another major factor influencing lenders’ estimation of your company’s financial strengths and weaknesses.
You don’t need to have an immaculate credit score and tons of cash or high-value fixed assets to get an SBA loan. SBA lending programs include assistance for companies affected by a natural disaster. To qualify for this type of funding, you must show financial hardship resulting from a significant loss or ongoing impediment to your operations. To get approval, however, you’ll probably still need to be able to show that your business was financially solvent and your operations were in relatively good shape before the disruption that a natural disaster caused in your normal course of business.
Write a Thorough and Persuasive Business Plan
When you apply for a loan, you need to convince lenders that giving you funding is a fairly safe bet. In effect, your application has to convey how your planned use of the proceeds will yield profits. You also need to demonstrate that you’re on top of managing your finances. Be specific about the amount of funding that you request, and write a descriptive account of what you’ll spend it on.
Finally, in formulating projections for the earnings that you hope to generate by utilizing additional resources, be sure to use substantive financial data. Relevant referential materials may include your previous earnings summaries as well as information about industry-wide growth in your field.