Deciding to get an SBA loan for your business is easy. With so many potential benefits, including saving money with the excellent interest rates, opting for this loan option makes a lot of sense. The tricky part comes when you have to fill out the application and provide documentation. The goal of this guide is to simplify things for your business and help you apply for a loan without obstacles.
What Documents Do You Need To Gather?
Along with the loan application, you need to submit a variety of financing records for your business. This can take a while, so it’s smart, to begin with, this step before filling out the application.
Gather financial documents that show your company’s cash flow. This usually means presenting several years of balance sheets, also known as profit and loss forms. These documents help you prove that you have sufficient working capital available to cover loan payments every month.
You can also set aside several years of your tax returns. These show your annual revenue, which is another important figure. While not always used for qualifying, your average revenue helps the lender determine what size of the loan is appropriate for your business.
If you have business assets available to use as collateral, you should gather documents proving ownership and the approximate as-is value of the items. For example, if you’re using real estate or heavy machinery to secure the loan, you can present the ownership deed or payment records showing your current equity, or ownership amount.
What Are the Basic Requirements for an SBA Loan?
There are two main things you need to focus on to qualify for SBA financing. First, you must prove that your company meets the Small Business Administration guidelines regarding small businesses. This mainly means showing how many employees you have.
The other requirement revolves around your credit score. While you don’t need excellent credit, you do need to meet a minimum credit rating. The higher your score, the easier it is for you to qualify. You may also use your personal credit score, if it’s good, to improve your chances of qualifying.
How Can You Prepare for Your Application?
Start getting ready for your SBA loan as far in advance as possible. Concentrate on having the best credit score you can. Pay your bills on time, check the state of your credit rating and work hard to have a steady cash flow.