Whether it is for new equipment, increased marketing, additional inventory or another purpose, every business needs funding at some point. For small businesses, traditional loans can be difficult to qualify for. SBA loans are a great alternative, because the Small Business Administration provides a guarantee to lenders, making it less risky for them to approve loans for small businesses. If you want to apply for a loan, keep the following in mind.
1. Apply Before Beginning a New Project
Loan applications are not processed overnight. There is often quite a bit of paperwork involved and it can take weeks or months for you to receive the money if you are approved. For this reason, you should begin your application ahead of time.
2. Don’t Hide Current Loans
If your business has already acquired debt, you should let your lender know. Your lender wants to know that you are able to make your payments, so existing debt could make a difference in the amount of money that you receive.
3. Be Prepared
Because the application process may take a while, you should organize any paperwork needed ahead of time. This will help things go more smoothly. You should also be ready to provide any additional information that your lender may ask for while they are going over your application.
4. Check Your Credit
Some SBA loans come with strict credit score requirements, so you should check your credit when applying. This can help you figure out which loans you may qualify for. If you need to improve your credit score, reducing your debt-to-credit ratio and making payments on time are easy ways to do so.
5. Do Your Research
Each lender and loan will have different requirements and terms. What will work best for your business depends on your individual needs and qualifications. Do some research about your options before beginning your application to determine the right choice for you.
6. Have a Plan for the Money
Before they approve your loan, the lender may want to know how you plan to use the money. Along with showing them that you will be using it efficiently, this will help them provide the funding and terms that are best for your business. Your plans for the funding will also affect the type of loan that you should apply for.
If you need funding to operate or grow your small business, SBA loans are an excellent option to consider. There are a variety of loans available to suit different needs and purposes. Doing some research and preparing ahead of time will make the process easier for both you and your lender.