How To Apply For A Small Business Loan

SBA loans are a great way to control the costs of capital for your small business. For many newer companies, they may even be the only available option, since traditional lenders often require at least two years of profitable operating history before they’ll approve loans for major assets like facilities for your business or major pieces of equipment. By guaranteeing a portion of the loan for healthy small companies with the income to put at least 20% down, the SBA offsets the risks of lending to smaller and newer companies, allowing the banks and other lenders they work with to approve loans they otherwise would not. So how do you land one of these loans?

Review Current Application Guidelines

SBA loans are generally the same year to year, but the specific guidance about how to qualify changes periodically. This happens as Congress authorizes new loan programs like the relatively recently added SBA microloans and disaster loans, but there are also annual changes due to scheduled revisions to income requirements and other details. Even if you’ve applied before, you’ll want to make sure you understand all the requirements in the application today.

Assemble Your Records

Long-term business loans represent a significant investment on the part of the lending institution, and in the case of loans guaranteed by the SBA, it’s a major investment by both the lender and the Small Business Administration. As a result, you’ll need the documentation to satisfy both of parties. Bank statements, financial projections from recent quarterly reports, new projections based on the acquisition of the asset, and other financial documents are going to be essential. Since the SBA has a mandate to encourage economic development, you’ll also need to have materials on hand to make the case that your expanded capacity will help your local economy.

There are a variety of ways to show that your SBA loans will positively impact the local economy as a whole, but the most popular one is by noting the addition of jobs to the local job market, which provides income opportunities to local workers. Another strategy is to indicate how the expanded business positively impacts your local suppliers, producing more jobs indirectly and enriching small businesses throughout your region.

Complete the Application

Most of the application form will be data transcription from your records, which is relatively simple. The important part to really strategize around is the business plan, which is where you describe your operation, show the projections for the impact your new loan will have on the company, and make your case for the positive impact the loan would have on your wider local economy. Writing a solid plan is its own topic, so take your time and research your options thoroughly as you write to maximize your chance of being approved for SBA loans.


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