Small Business Administration Loans
In tough economic times like these, small business owners have even more difficulty acquiring the capital they need to stay afloat or expand. If your enterprise is struggling to remain profitable but you are unable to secure financing from a traditional source, consider a Small Business Administration (SBA) loan.
The United States federal government created the Small Business Administration in 1952 with the goal of assisting small businesses and protecting their interests in an economy that often favors conglomerates. In an effort to encourage free competitive enterprise, the Small Business Administration offers a number of financial assistance programs, including a guaranteed loans program.
Though the Administration itself is unable to provide direct funding to the public, it partners with private-sector lenders (primarily banks and credit unions) which screen applicants and distribute Small Business Administration Loans funds accordingly to ventures that they would normally not be able to back.
To be considered for a SBA Loan you must first provide proof that your efforts to obtain conventional funding elsewhere were unsuccessful. Most for-profit ventures operating within the United States or its possessions are eligible for consideration, though certain types of businesses may be excluded.
Furthermore, some private lenders stay away from risky ventures like restaurants, so be sure to shop around to find a lender that caters to businesses like yours. The best way to acquire more information about your specific Small Business Administration Loans situation is to speak directly with a local representative of an affiliated private-sector lender.
When meeting with loans officer, be prepared to discuss in detail the history and goals of your business, as well as how this loan would advance your specific business plan. Your lender will also require significant amounts of paperwork, including SBA-specific forms, up-to-date statements of personal and financial history, tax returns from the past three years, income and cash-flow statements, balance sheets and sales projections, and a copy of your business license.
Generally speaking, you can accelerate the entire process by providing thorough paperwork from the beginning. Additional information like a copy of your marketing plan can also encourage a hesitant lender to approve your request.
Even if one lender extends a verbal guarantee of funding, hedge your bets by starting the process with two or three other institutions. The SBA loan approval process can take up to 120 days, and you don’t want to invest precious time only to find that your request has been denied after months of waiting. If various lenders turn you down, seek counsel from the SBA’s website or the denying loan officers about how you can improve your proposal.
