If you're planning to apply for an SBA backed business loan it's natural to feel overwhelmed by the process. However following some practices can greatly increase your chances of success. In this article we'll discuss steps to take and pitfalls to avoid when preparing your SBA loan application.
Do; Provide records. Lenders will want to review both historical and projected financial statements in order to evaluate the financial health of your business. Make sure you have these documents prepared in advance.
Don't; Procrastinate till the minute. Give yourself time to complete all the necessary paperwork and gather required information. Rushing through the application can lead to errors or oversights.
Do; Clearly outline how you plan on using the loan funds. It's crucial that you clearly demonstrate how the loan will contribute towards achieving your business growth objectives, such as purchasing equipment expanding facilities, hiring staff, etc.
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Don't; Overestimate the value of collateral. To avoid issues always seek appraisals, for any business or personal assets that you plan on offering as collateral.
Do; Showcase your ability to repay the loan. Provide evidence of revenue streams and healthy profits that demonstrate your capability to make repayments.
Don't; Share information. Only provide documentation explicitly requested by lenders in order to avoid complicating the application process unnecessarily.
Do; Review your credit reports beforehand. Take some time to ensure that your credit history is accurate. If there are any issues or discrepancies be prepared with explanations.
Don't; Switching banks in the middle of the application process can raise concerns, about your stability.
By taking the precautions and avoiding mistakes you can submit an SBA loan application that meets all the requirements set by lenders. Working with a SBA lender will offer advice to increase your chances of getting approval, for your business.
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