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Step 1
Before seeking A SBA loan you must prove to the SBA that you can't get a loan from a private source. The SBA was not created to compete with private lending institutions. You must first get turned down for a loan by at least two different banks. If you live in a low populated area, one turn down may be enough.
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Step 2
After being refused, ask your banker to make you the loan under SBA's loan guarantee plan or to participate with SBA in a loan. If the banker is interested, ask him/her to contact the SBA for a discussion on your application. In most cases, the SBA will deal directly with your bank.
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Step 3
If the bank is just not interested then you'll have to apply directly to SBA for a loan. About 60% of all SBA loans are obtained directly through SBA without any bank involvement whatsoever.
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Step 4
To find the telephone number of your local SBA office, call the Federal Information Center nearest your home or call the SBA hotline at 1-800-827-5722.
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Step 5
You'll now be required to fill out an SBA loan application plus other forms designed to help SBA assess the soundness of your business. At a minimum, you'll have to fill out an application for the loan, statement of personal history and monthly cash flow projection. Monthly cash flow is basically your estimate of the revenue you expect to take in and all anticipated expenses.
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Step 6
If you need help in completing the forms someone at SBA should be available to help you. You don't want any mistakes on your paperwork as this may cause a delay in getting your loan when the prepared forms are kicked back to you to correct mistakes. Just make sure things are done right before submitting your paperwork for SBA's approval.
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Step 7
The SBA will now evaluate your loan application to determine your chances of success in your own business. If you plan on operating the business yourself and manage the day-to-day activities, that's an important plus in your favor. Another plus would be if the business will be your sole source of income, the SBA figures that you'll work hard at the business if your families livelihood depends on it.
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Step 8
The SBA will also look at your ability to repay the loan. They will look over your credit history but will give special attention to see if you have a bankruptcy on record or a default of a loan.
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Step 9
Keep in mind that the SBA is prepared to take greater risk to get you started in your own business. Don't count yourself out no matter how weak your financial conditions seem.
