Often additional funding is required to move small businesses along to their next stages of growth. However, applying for loans from the Small Business Administration can be a daunting process that is even more difficult if you are unprepared. Here are some tips to help small businesses increase their chances of obtaining SBA loans.
Select a Lending Institution
SBA loan applications generally take from 30 to 90 days to process. While larger banks have the staff and resources to easily expedite small business loans, they also tend to focus their attention on larger, more pretentious clients. On the other hand, you might be able to build a more personal relationship with your banker at a smaller bank, and this can facilitate the procedure of getting your loan application approved.
Keep Your Credit Score High
High business credit scores are essential when applying for SBA loans. With this in mind, always pay your bills on time or even early. Do business with vendors that report your payments to business credit bureaus, and keep your credit utilization ratio low. Credit reports for loans impact your credit score, so to minimize the damage, only apply for one loan at a time.
Maintain Steady Cash Flow
In order for your company to qualify for an SBA loan, banks require you to demonstrate that your small business has sufficient cash flow to handle the payments. An analysis of existing debt, past tax returns, and other indicators may suffice for established businesses. If you’re just starting out, have a business plan and financial projections that clearly indicate ongoing healthy cash flow.
Prepare Your Documents
As a prelude to SBA loan applications, always keep meticulous and up to date financial records for your company. An accountant can help you keep these documents well-organized so that when you require them for official purposes you can easily find what you need.
For more advice on requirements and applications for SBA loans, get in touch with Value Capital Funding.