A STEP-BY-STEP

GUIDE TO SECURINGA SMALL BUSINESSLOAN

There are over 8 million small businesses in the U.S. These establishments come in many sizes and their financial needs vary accordingly.

If you’re planning to start a business or expand an existing business, and you have trouble qualifying for a traditional bank loan,

you might need SBA loan financing.

SBA small business loans range from about $5,000 to $5 million with the average loan

around $371,000.

There are several types of SBA loans with different allowable uses.

These loans can be used for working capital, renovations, equipment, to finance receivables, and in some cases, to finance the purchase of company facilities.

The following step-by-step guide will outline everything you need to know about SBA loans and how to secure one for your business.

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TYPES OF LOANS

This type of loan is the most basic and the most common within SBA's business loan programs. It gives loans to eligible borrowers for starting, acquiring and expanding a small business when they can't get funding through normal channels.

7 (A) LOANPROGRAM

CDC/504 LOANPROGRAM

This type of loan provides growing businesses with long-term, fixed-rate financing for major fixed assets.

A private lender must agree to cover up to 50% of the loan; a Certified Development Company picks up 40% and the borrower must contribute at least 10% equity.

This loan type offers very small loans to start-up, newly established or growing small businesses for working capital or the purchase of inventory, supplies and equipment.

These loans are administered through nonprofit organizations with experience in financing small loans.

MICROLOAN PROGRAM

CRITERIA

Under law, the SBA can't guarantee loans to businesses that can obtain the money they need on their own. So you have to apply for a loan on your own and be turned down first.

CAN’T SECURE TRADITIONAL BANK LOAN

In order to qualify as a small business, your establishment needs to meet the government's

definition of a small business for your industry. Size requirements vary depending on industry, but

generally they cannot exceed500 employees.

MEET THE SBA'S SIZE REQUIREMENTS

The SBA does not secure the loan directly, rather they make loans available through participating vendors and provides a government guarantee to the lenders. Therefore, you must submit a loan application to a bank or other financial company and ensure you meet their specific qualifications.

MEET LENDER QUALIFICATIONS

THE APPLICATION

REVIEW YOUR CREDIT REPORTA major consideration for a loan is your personal and business credit history. A high score is important to be able to secure a SBA loan. While some SBA loans may be made with FICO scores below 700, potential borrowers with scores in the high 700s or 800s are generally

greeted with respect by lenders.

HAVE A BUSINESS PLANA strong, detailed plan that outlines what your business is, what you need money for and how/why you will be successful is absolutely essential.

You will need personal and business financial statements for existing and startup businesses and as well as a projected financial statements. The most important information you can provide a lender is a cash-flow projection.

PREPARE FINANCIALS

You need to find a bank or lender that works with the SBA. Call possible lenders, providing a brief profile of you and your business to see if the lender has an interest in exploring the possibility of a loan. If so, make an appointment to meet the lender.

FIND LENDERS

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