For small businesses that are just starting out, getting the money you need for your company can be a struggle. Luckily, the Small Business Administration can help. SBA loans can be easier to get if you have had trouble qualifying for a traditional loan from a bank. Because the SBA provides a guarantee for these loans, they are less of a risk for lenders. However, approval is still not certain. Take the following steps before applying for a loan to improve your chances.
1. Create a Business Plan
Lenders don’t just give money to anyone who asks for it. They want to know that they are making a good investment and that you will be able to pay back the loan. Create a detailed plan for using the money and show how it is going to improve or help your business.
2. Work On Your Credit
A low credit score often indicates that you have had a history of financial problems. Maybe you found yourself unable to make payments on time or had a high amount of debt compared to your available credit. Building up your credit is one way to improve your chances of getting SBA loans. You can do this by reducing your debt and making payments on time or early.
3. Get Organized
Applying for a loan often requires a decent amount of paperwork. Make sure you have everything you need before beginning the process to keep things running smoothly. This will include basic information about your business, credit statements, tax returns, and a variety of other items. The SBA provides a helpful checklist so you can get all of your information in order ahead of time.
4. Check Lender Requirements
Although you are getting your loan through the SBA, they are not the ones providing the funding. They work with lenders to help you get the money you need. Depending on the lender you choose, their requirements may vary, so it is important to check them carefully. Do some research on your options since some lenders may be a better fit for your business than others.
Although it can be more difficult to get a loan as a small business, it is not an impossible task. The Small Business Administration is there to help you if you are having trouble or don’t know which step to take next. Applying for SBA loans can seem intimidating, but there are plenty of helpful resources available to you. The money you could receive may be just what your business needs to grow.