Getting a Guaranteed Business Loan to Start a One Dollar Store

Guaranteed loans for a One Dollar Store are available.

A guaranteed business loan is insured by the Federal Government through the Small Business Administration (SBA). The SBA loan guaranty program provides borrowers with several benefits including fixed-rate loan options, low down payment requirements and moderate interest rates. The SBA only insures borrowers with a low risk of default, however, so it can be challenging to qualify for the guaranty program. An entrepreneur looking to start a One Dollar Store will need to have a good financial background and will need to prove the store will be successful.

Things You'll Need

• Good credit
• Seed capital
• Business plan

Instructions

1. Submit an application to a private lender. The SBA does not provide loans directly; instead, it will only insure private loans. All borrowers must qualify for a private loan prior to seeking an SBA guaranty.

2. Provide necessary personal credit information. When you are starting your new One Dollar Store, your business will have no credit history of its own. You must personally show you have a good record of repaying your debts by providing your Social Security number or taxpayer identification for a credit check. You must be creditworthy in order to get approval on your loan and your loan guaranty.

3. Submit your business plan. The business plan for a One Dollar Store should present information on where the store will be located, how much the facility's rent will be, the estimated cost of stocking goods in the store, the estimated profit that will be earned from sales, and most importantly, marketing proof that a One Dollar Store will be a profitable business at the selected location. This part is critical because the lender and the SBA will evaluate your store's likelihood of success as a primary factor in your loan approval.

4. Provide a statement of down payment. The SBA requires you have "reasonable owner equity to invest" in your new business. If you do not personally have the capital to invest, you must secure capital from private investors so you may place a down payment on your small business loan.

5. Wait for the loan to go through the underwriting process. This can take a few weeks. If the lender asks you for further supplemental information, such as information on your background as a store owner, supply this information. If you have owned a One Dollar Store or similar establishment successfully in the past, you will have a better chance of qualifying for the loan.

6. Apply for an SBA guaranty. The guaranty can only be granted if you have been approved for a small business loan. The lender may inform you that you do not qualify without an SBA guaranty. Supply this statement to the SBA to expedite your application for a guaranty.

Tips & Warnings

• If you work with an SBA-qualified lender, the lender can submit your SBA guaranty forms for you, saving you time and hassle.

• Certain businesses are prohibited from approval for SBA loans. One Dollar Stores will generally qualify, even if they are franchised businesses. However, if you intend to operate your store seasonally or as a nonprofit entity, you may be disqualified for an SBA loan.

References

• SBA.gov: Guaranteed Loan Programs.