Small business loan applications can be a little daunting if you’re new to them, especially if your business is also new. Many traditional loan programs don’t even offer loans to companies that are less than two years old or to those with less than two years of continuous profitability in the recent past. Luckily there are some options designed for new businesses and small companies that have trouble meeting the income requirements set by traditional banks. SBA loans are often the best option among those, because the Small Business Administration guarantees a portion of the loan, allowing lenders to offer great interest rates to borrowers who might not have qualified for traditional loans.
If you are planning on applying for an SBA loan soon, there are a few tricks to setting up an application for a quick approval. By adapting your normal loan application process to incorporate them, you can speed up approvals and put resources into your company’s hands when you need them. Keep in mind, though, that an SBA loan is still a long-term loan. Even a fast approval can take a few weeks.
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Submit Complete and Accurate Collateral Lists
One of the biggest reasons for loan denials in SBA programs is the submission of incomplete application materials. Business plans without the right components are common, but the most common mistake is an incomplete or inaccurate accounting of the assets used as collateral for the loan. This is an especially important step for multi-asset loans like those offered by the SBA’s 504 loan program. Make sure you have both accurate values and a full accounting of the assets the loan will be used to purchase before applying for SBA loans.
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Have a Down Payment Cash Ready
Checking out a company’s financial situation is a normal part of loan approvals, but for new companies seeking an SBA loan, the owner’s finances are just as important. The flagship programs that most people use for major asset loans require owners to personally invest in the project with a down payment of 20% or more, which means you must be prepared to show your funds so the lender knows you can close.
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Get Your Credit Report Ready
Your company’s and personal credit are vital to the application process for SBA loans. Make sure you take care of any issues on those reports, so you have a strong credit score when lenders check out both numbers. If the company does not have a credit score yet, don’t worry, just work on making sure any issues dragging down your score get taken care of.
Seek Expert Assistance
At BMF Advisors, we have a lot of experience supporting local small business owners. We understand the challenges that can arise, and we provide financing that is comfortable for your needs. We customize every loan to your specific situation, keeping interest rates low and giving you plenty of time to pay back the loan. Contact us today to see the benefits for yourself.