How to Get an SBA Business Loan
The U.S. Government makes money available to help small businesses by guaranteeing the loans. The loans are given directly to the owners of the business through standard lending agencies. Every year, millions of dollars are put into the hands of owners of businesses to help them in various ways, such as business start-ups, business expansion, job creation, and more. An SBA Business Loan could help you get your business started.
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Things You'll Need
- Resume
- Bank Statements
- Credit reports - Personal and Business
- Loan applications
Instructions
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Create an updated resume. While not every lender will require a resume, most of them will want to know that you have some management or business experience, says Business.gov. They will look for this information particularly if you are planning on starting a new business. It is also strongly recommended that you be ready to provide personal background information that includes earlier addresses, all names used, any criminal background, your formal education background, and more.
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Make a business plan. This is usually necessary to get a small business association loan. This document will be looked at carefully by the lender to ensure that you have good business sense and management ability. They will also want to know that you understand finances well enough to be able to ensure repayment and have a realistic plan that will help guarantee it.
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Research the market. PowerHomeBiz mentions that the SBA will want to see from the business plan that you thoroughly understand the business, have researched the market, and know what is involved. They also want to see that you have a right approach toward reaching your target group and can realistically make money.
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Learn about the available loans. The SBA has three different small business loan programs available and each one is for different purposes. Some lenders, such as Wells Fargo, have their own programs that work with the SBA. The SBA does not actually lend any money, but simply provides guarantees to the lenders.
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Choose the loan program you need. As of 2010, the first of the three loans is the SBA 7(a) Term Loan, which provides loans of up to $2 million. It can be used by startup businesses to buy land, equipment, furniture or inventory. The second type of loan is the SBA 504 Term Loan, which is restricted for the purpose of either job creation or retention. Its value ranges from $200,000 to $10 million. The third type is called a MicroLoan, and it goes up to $35,000. It is for small businesses of less than five employees and is for those who are minorities, disabled, or simply have bad credit. Other specialized loans are also available.
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Fill out the required forms. Each lender may have their own forms, but you will need to obtain them and fill them out. You will also need some personal and business documents, says Business.gov. This may include personal and business tax returns (if you have an existing business), financial statements, bank statements, accounts receivable and payable, and personal and business credit reports.
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Get the money ready. You will also need to have a personal investment in the business, says WellsFargo. This will range anywhere between 15 to 35 percent of the SBA loan amount.
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Tips & Warnings
According to MyOwnBusiness, an SBA business loan could be less costly than a loan from other sources. In addition, it will give you the longest payback time – from 7 to 20 years.
References
- Photo Credit business image by peter Hires Images from Fotolia.com
