Applying for an SBA loan can be daunting. Just make sure your business is ready by going over the documentation required. Here are five tips that can help you know when you’re ready to apply for one of these favorable loans.
Have a sound business plan
Show your three- to five-year projections, your financial plan, management plan and marketing and operations plan. You should include information about how you plan to repay the loan. Also, your business plan should outline the resources you will be purchasing with the financing.
Check your personal credit
As part of your loan application, your personal credit will be checked, as will the credit scores from any other owners.
Check your business credit
Although the SBA looks at personal credit, it may also consider your business credit. Make sure that the report is accurate and error-free.
Boost your cash flow
Lenders want to know that your business can cover your current obligations and your loan payment each month. Collect receivables quickly. Slow your own payments out, but don’t be late. Offer discounts to fast-paying customers or require a down payment to get more cash into your balance sheet.
When taking out a loan, the SBA might protect the lender from losing money, but the SBA will want to protect themselves. You will still be on the hook if you default. Leverage assets that will act as collateral or find a co-signer.
Perseverance Is Required
One of the best things you can do to improve your chances in getting an SBA loan is pay attention to the details. Make sure you have all the paperwork needed. Dot every I and cross every T as you go through the loan process. The application is tedious, but when you consider how much you’ll save in interest over the years, you’ll be glad you applied.
Contact Value Capital Funding for more information about SBA loans and other financing options for your business.