One of the first steps to becoming a small business owner is to procure funding for your new business. Many aspiring business owners look for these funds in the form of a small business loan. Traditional bank loans can be very difficult to obtain, but getting a loan backed by the Small Business Administration can improve your chances of getting approved. Here are some tips for preparing for an SBA loan.
Research Potential Lenders
When it comes to getting a loan, not all banks are created equal. It’s important when applying for your loan to do some research. Compare interest rates and terms, loan requirements and the reputation of multiple institutions before deciding on a bank to fund your business. You will also want to make sure the bank you plan on applying at accepts SBA back loans since not all lenders do. Visit the SBA website to see a list of SBA preferred lenders and use their loan comparison tool to make this process easier.
Make Sure You Meet Loan Requirements
Once you have decided on a lender, it’s a good idea to make sure you meet all of their requirements for a small business loan. Do you have enough assets? Does your personal credit score meet the minimum threshold? These are just some of the things a bank will look at when deciding your creditworthiness. Making sure you measure up from the beginning will go a long way towards getting approved.
Prepare Your Documents
Equally important to meeting the bank’s requirements is having all of your documents prepared when you submit your application. Find out from your chosen lender exactly what they will want to see and get these items ready before you apply for the loan. It will be a much smoother process if you have everything the bank needs when they ask for it rather than holding up the process trying to find the paperwork.
Have a Business Plan
Not only will your lender require paperwork to process your loan, but they will also likely ask you about your business plan. Take the time to prepare a detailed plan, including how you plan to repay the loan. You may be asked for an in-person interview to discuss this plan, so practice orally presenting your ideas with a friend or in front of a mirror.
Getting an SBA backed small business loan doesn’t have to be a daunting process if you are prepared. Do your research, check your qualifications, prepare your documents ahead of time, and have a solid business plan to increase your chances of getting that loan approved.