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3 things you need to know about before applying for a SBA loan

Article Submitted by: Robert Wagner

Friday, 01 January 2010

A Small Business Administration loan can be complicated. Over the past year one of the problem is getting a small business loan is that owners do not understand the SBA loan process. Any time that you have to deal with the government it can be a challenge. I have put together 3 things that a business looking to get funding should look out for in advance of applying.

1. Learn about the different loans that the SBA has to offer the small business and narrow your chooses down before talking to a commercial bank. One of the challenges is that just because a lender is approved to do SBA loans they may not do all of the guarantee programs that the SBA has to offer Like the SBA 7a loan program. If you think that you would qualify for more than one program try to find a lender that will fund loans in all the programs that you qualify for. If not you could have a lender trying to force a loan on your company that you do not need, want, or qualify for.

2. Expect that the loan will take a long time to fund. Typically a commercial loan that is not going through the SBA grantee program will take up to 90 days to funding. With a SBA loan like the SBA 504 loan program this time could possibly double. What a small business should do is anticipate future cash needs. A good rule is if you think that your small business at anytime in the next 12 months could use a capital injection, start to prepare now. Even if the need never happens you can always say no to the loan. Remember when you need a loan the most, you may not qualify. Be prepared.

3.Get your paperwork up to standards. With any government loan grantee you will need some basic documentation and it will need to be up to date. This paperwork is the basic documentation that would help run a small business better on a day to day bases. A loan officer will be looking for future expectations of sales and profit. You will also need a cash flow and P&L statement. Let's face it most small business owners do not do a good job of keeping up with this kind of documentation. If you happen to use an accounting program the reports with history and future projections can make this job much easier.

To review, a small business owner should anticipate what they will, or may need, a loan for. Growth or expansion should be able to be forecast in advance. Keep in mind that loans through the SBA can take up to 6 months. Make sure you keep up with your paperwork and documentation. Plan ahead and do some sales or future revenue projections. This will give you a good idea how you are doing. Educate yourself on the different loan programs the SBA has to offer and the requirements for the SBA 7a loan. This will help you in making a decision on what commercial leaned to work with.

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About The Author:

You can learn about the SBA loans and how to get funding.With the economy not getting any better small business need to get prepared and learn about the SBA Loan programs. Robert Wagner has put together a website to help small business owners get the education that then need for the future.

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