5 Easy Steps on How You Can Get Ready For an SBA Loan
The uncertainty of employment has pushed many people to start businesses. Maybe you have had a dream to start a company. Might be you already have a business, but you need it to grow. In all these scenarios, the lack of funds is the main problem.
Years ago, financial institutions and banks made it impossible for small businesses to get loans. They set the bar too high, and when applicants got there, they had poor loan documentation that crowned the whole process.
Now, it is easier to secure a business loan. The SBA loan for startups is much easier for applicants to obtain than before.
The SBA loan is simply a small business loan that is partially guaranteed by the Small Business Administration. In turn, they take on the risk that a financial institution would typically be exposed to when issuing out loans.
In other words, the SBA is not the lender but your guarantor. They work closely with financial institutions. If you skip paying the loan, the SBA pays the bank or financial institution the portion which they had guaranteed.
When the SBA is in the picture, banks consider the loan a bit less risky since they cover up to 85% of the total credit.
Since the government guarantees these loans, they are not that easy to get because of the severe vetting process. But many people have learned how to navigate and have secured loans.
If you are not conversant with the process of getting a loan from a financial company near you, then here are five steps that can help you get ready.
1. Research Prospective Lenders
It is vital, as a loan applicant, to do an excellent fact-checking about the potential lenders. You need to check if they have a track record of giving loans to small businesses. If they do, see if they offer SBA backed loans. You need to know that not all financial institutions offer SBA backed loans.
Financial experts will always advise you to do background checks and visit different places before you settle on one. Preferably, you need to choose one that has a relationship with SBA. This will make you secure your loan much faster.
2. Get Your Application Ready Loan
In case you select a loan company in Ohio, you need to make sure that your papers are on point. This means that you have met all the requirements necessary for you to secure a loan. Clearly state what the money is for and the correct amount. Be precise to help fasten the application process.
There are other important details like your credit score that will be added in your application. If your score is good, the process will move faster than expected. Remember your application will be submitted to the SBA for approval.
3. Meet the Minimum Requirements
Different banks have different requirements, especially when it comes to SBA-backed loans. But, SBA backed credits have minimum requirements that cut across all institutions. These can be your asset list, loan request form, and financial statements.
The other thing that you should include in your application is your repayment strategy. The clarity of your application will help you get your application approved much faster.
4. Have All Your Documentation
You will need to present all the documents relating to your business. For instance, your financial records for the past several years to show the financial position of your business. These documents have to be up to date.
5. Be Prepared for the Interview
Before getting the loan, you might be called for an oral interview. It is essential if you carry yourself as the businessperson you are or inspire to be. Know your stuff. You should be able to corroborate the information that is already in your application form.
Your repayment plan should be clear and viable. Your business plan will have to be viewed and scrutinized. Do not worry; there are many professionals who can help you with the financial plan so as it can be financially sound.
When you have ticked all the boxes, your application can quickly be approved. If you are thorough and careful, you can get your business up and running in no time. In case you need help contact Heritage Financing, and we will sort you out.