If you hope to start your own business, you need enough working capital to get it off the ground. For many people, this means looking into SBA loans. These government-backed financing options are available for a range of businesses, but you’ll need to do a bit of legwork first. Check out these tips for getting approved.
1. Fix Your Credit
Because an SBA loan is government-backed, your personal credit score matters, especially if your business is not well-established. This means lenders will look at your personal credit history to determine whether you pay on time, use credit responsibly, and have a strong mix of credit accounts. If there are discrepancies on your report, now is the time to fix them.
2. Prepare Yourself
It’s better to be over-prepared than underprepared for the application process. The organization shows that you can provide information in a timely fashion and have everything ready as needed. Plus, the more prepared you are, the faster the application process will be.
3. Create a Detailed Financial Plan
Lenders who provide SBA loans want to know how you intend to use their money, which means you need a detailed financial plan. Avoid vague responses, instead of focusing on whether you’ll use the money to purchase inventory, expand a current business, pay down debts, or hire new employees.
4. Ask Experts for Advice
Before you apply and meet with lenders, talk to some experts to see how you can improve your chances of being approved. If you tell a lender you’ve met with experts, including a board of directors or financial advisor, they are likely to understand that you are more serious than the average applicant. Experts can also provide you with a more realistic number in terms of what you’ll need to accomplish your business goals.
5. Start the Application Process
Funding via a government business loan can take weeks or even months. It’s not as simple as filling out an application at the bank and waiting a few days for an answer. For this reason, it is important to begin the application process as soon as you have all your financial information together. The longer you wait, the more likely you are to end up in a bad financial situation while you seek funding.
SBA loans are an excellent way to grow a small business or otherwise get your foot in the door in the business world. Always apply for a small business loan through a reputable lender that is in excellent standing.