Tips for Getting Approved for SBA Loans
Many small business owners need to take the next step of growing their business by obtaining a loan. Unfortunately, some individuals are unsure of what it takes to get approved for a Small Business Administration (SBA) loan. Here are some tips to help you prepare for the commercial loan process.
Provide a List of Assets
In order to get on the good side of your lender, it’s a good idea to show that you have some collateral to back up the loan. Lenders are not venture capitalists and they are still assuming some risk when providing SBA loans. Show them that you’re serious about the loan by giving them an itemized list of personal assets.
Know How Much Money You Need to Borrow
Some individuals think it’s a good idea to borrow as much money as possible. However, if you want a better chance of getting approved for a loan, have a well-defined plan with your goals and future estimated expenses. Be realistic about how much money you need to borrow. By coming to the loan process with an organized approach, your lender is more likely to feel like you can be trusted to pay back the loan.
Show Adequate Cash Flow
One of the greatest weapons you can use to get approved for SBA loans is your accounting books. It’s ideal to come to the loan approval process with at least your past three years’ tax returns, an up-to-date financial statement, and cash flow projections. The lender prefers to see that you’re able to pay back the loan with current cash flow.
Have a Down Payment
Coming with a down payment on a commercial loan is preferred. Even if the lender doesn’t require it, it’s a good idea to have as close to 10% of the total loan amount as possible.
Proof of Clean Credit
Lenders want to know that they’re going to be paid back for their SBA loans. Therefore, it’s wise to ensure that your personal and business credit scores are in good condition. By preparing ahead of time and showing proof to the lender that you’re in good financial condition, your chances improve for being approved.
If you’re preparing to apply for an SBA loan, consider these helpful tips. When working with a lender, provide proof of collateral, have a plan of how much you need to borrow, show good cash flow, provide a down payment and have a good credit score.