SBA Loans: Getting Approved With Flying Colors
Acquiring a business loan can be tricky. There are often many hurdles to jump over to get the capital you need to make essential purchases. However, it is beneficial to look at all your loan options, including SBA loans. The Small Business Administration offers loans to entrepreneurs looking for cash, and the organization works with various financial institutions to guarantee business owners get approved. To take advantage of this, you need to create a solid application.
One of the most important aspects of your SBA application is going to be your business plan. You will be asked to submit a comprehensive plan that outlines where your business is going to be five years in the future. In addition to having a financing and management plan, you also need to outline how you plan on repaying the loan. Without that information, a lender is going to be unsure if you should be given such a large sum of money.
When applying for SBA loans, you can be certain your company’s credit history is going to be looked at. You need to get ahead of this if you know you have a low score. Before applying, look at your credit score through one of the big three bureaus: Equifax, TransUnion and Experian. This also lets you know if an error has been made on your report. Mistakes can happen, and if you notice anything that seems off, you should contact the bureau to get it corrected.
Lenders also want to see that you have sufficient cash flow. You need to show that your accounts receivable are paid off in a timely manner, and you do not have many clients defaulting on payments. One way to collect payments on invoices faster is to offer small discounts to customers who pay in a timely manner.
Finally, you should be aware that you may be asked to put up some collateral. Lenders often ask for this so that if you end up defaulting on payments, they can collect something to recoup some of the loss. Most of the time, collateral takes the shape of the building or equipment. If your company does not have expensive enough items to offer as collateral, you may need to offer some of your personal assets.
Understanding all this will make your meeting with the Small Business Administration go so much more simply. Be prepared to fill out a lot of paperwork for your SBA loans, so your business gets the capital it needs to thrive.