Increase Your Chances for SBA Loan Approval
You may have spent months or years planning your business, and now you have reached the stage where you have to find working capital. There are many ways of raising money for your business, but one of the most popular ways to get enough money you need to hire workers and start producing items is through a loan. There are various types of funding available to small businesses, including bank loans and crowdfunding, but an SBA loan is the lending vehicle of choice for many entrepreneurs.
One reason this type of loan is preferred among new business owners is that is specially designed for businesses. You could opt for a bank loan that may involve a long waiting time that could delay production of your item. A business loan may also take a long time, but at least the lenders are aware of your needs as an entrepreneur. You can find a loan that has a long repayment period of up to 20 years or a relatively small loan to fund your immediate business needs.
To increase your chances of approval for an SBA loan, you need to prove your ability to pay it back. One essential thing you will need is a business plan. This plan should describe your business, explain exactly what it produces or does, give an idea of what kind of customers you have and how what you offer compares to that of the competition. It should also detail how long you have been in business and provide a full picture of your financials, including how much revenue you produce every month, what your expenditures are and how much debt you already have.
In addition to providing a business plan and a full picture of your company’s financials, the business loan provider is likely to look into your personal finances. Even though you keep your business expenses separate from your personal finances, especially for tax purposes, your personal financial record is relevant when you are applying for a business loan. Even if your personal record is spotty, there is still a chance you can secure a loan, but maybe at a higher interest rate. You will also need to provide your personal tax records and the tax returns for your business.
Your financial records and prospects as outlined by the business plan can be a determining factor on whether you are approved for an SBA loan. If you are turned down, you can always try again after a certain period of time if your financial picture improves and if your business shows stronger revenues.