Getting approved for SBA loans takes work. Since SBA loans have the same requirements regardless of their source, there are a few things business owners can prepare ahead of time to make the process easier and faster.
Dispelling A Myth About SBA Loans
Before we get into requirements and tips, it is important to understand that the Small Business Administration is not a lender. Rather, the SBA guarantees a certain portion of the funding for loans in order to offset the risk to lending institutions. The SBA also provides the guidelines that both lenders and business owners need to follow in order to get access to funding.
Do You Have A Business Plan?
Creating a thorough and detailed business plan is one of the best ways to get approved for SBA loans. A solid business plan shows lenders that you have done your research and understand the finances involved in starting and growing your operations. A business plan also serves as a guideline for you to track and change as you reach your milestones. Nothing in your business plan is permanent, but lenders want to see that you understand the what is involved in running a business and how profitable it can be.
Clean Up Your Business Credit Report
High business credit ratings are not necessarily required for SBA loans. However, having a clean business credit report will put you much closer to getting approved. A month or so before applying for SBA loans, get a copy of your business credit report. Go through the report and look for any outstanding balances, so you can pay them off before meeting with your lender. Since credit agencies are large entities, it usually takes about a month for any changes to show up on a business credit report. In all honesty, going through your business credit report on a monthly or quarterly basis is a good habit to get into, and can open the door to larger financing options at better rates.
Banks Are Not Always The Answer
Banks have their own process for handling SBA loans. Banks and similar lenders use a “chain of command” process, which involves sending SBA loan requests between departments, which can cause delays. It is best to use a lender that is recognized as a “Preferred Financial Services” company. These lenders handle SBA loans in-house, which speeds up the entire process. Preferred Financial Services lenders can also provide the best terms and rates to business owners.
Learn More About SBA Loans
At Vortex Funding, we provide programs for SBA loans for everything from working capital to equipment, and even commercial real estate transactions. As a Preferred Financial Services company, we can get you the most favorable terms and rates. Contact us today to learn more.