SBA Financing

In today’s challenging market, many small business owners have come to rely on SBA Financing. As an independent federal agency that aids small business owners, the SBA (Small Business Administration) can help you get the financing you need to grow and sustain your business.

But is the SBA still “backing” loans in the US? Yes! Are they still offering financing? Absolutely! We just got approved for an SBA Loan for $10,000 with an APR of only 3.9%. The loan is an installment loan (non-revolving) with 30 year term. So our minimum payment each month is only $47/month. Plus there is no pre-payment penalty. So if we wanted to payoff the loan quicker. We could! Now, let’s share some details on SBA and some tips on getting your business approved…

The SBA works with over 5,000 Banks in the United States that lend to small businesses [1]. Although you will need to show financials and documentation to support the loan; the guidelines for SBA Financing are less strict than traditional business loans. The reasoning behind the flexibility of SBA lending is that the SBA actually guarantees the majority of the loan that is being written by the bank. This equals less risk to the bank, which in turn means better pricing and interest rates to the borrower.

When getting ready to apply for SBA Financing, you will need to have the basics of a loan application ready. This includes an explanation for the purpose of the loan, a summary of your business, your ideas for growth and expansion, amount of financing needed and an explanation of your ability to repay the loan. The summary of your business should not only tell the lender what it is that you do but also provide background information on revenue, number of employees, years in business and the industry you are in.

Secondly, you will need to provide financials to the lender. This may include, profit and loss (P&L) statements, balance sheets and tax returns. If you are a new business, then it is acceptable to project an income statement for the upcoming year based on your projections or business plan.

One of the greatest techniques to getting approved for SBA Financing is to work with a lender that caters to small businesses in their community and are actively lending. Introduce yourself to the person at your local bank that handles business lending and try to determine the “lending mood” of the bank. Are they actively approving applications each week? Or are they very stale and conservative? Some Bank Business Managers that have years of experience can actually give you advice and help position your loan package in such a way that you have the best odds of getting approved.

To learn more about SBA Financing and obtaining loans for your small business, please visit our Business Credit Blog.

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