Getting Approved for a SBA Loan
There are several fundamental characteristics that lenders want to see in small business loan applicants. Identifying these criteria and evaluating how your small business measures up will help you devise a game plan to improve your application and get approved.
Raise Your Credit
It can be difficult for a small business with limited resources to establish and maintain good credit. However, a good credit score is typically one of several minimum threshold criteria that lenders want to see on applications. To boost your company’s credit score, make all of your ongoing payments consistently and avoid drawing too many lines of credit. Consolidating existing debt to obtain more favorable interest rates can help you raise your company’s credit score significantly. For the best possible result, you’ll need to boost both your personal and your company’s score with all three credit reporting bureaus.
Present a Sound Business Plan
Including a compelling and comprehensive business plan in your application will make lenders much more likely to take your application seriously, and it may even help to make up for shortfalls or deficiencies in other areas of your sba loan application. A good business plan reflects organization, resourcefulness, and due diligence. Lenders will want to work with you when they see that you’ve created a workable model that includes room for contingencies or missed goals.
Keep Your Information Organized
Prospective lenders may require you to provide detailed financial information to corroborate information that you’ve provided on your application or to resolve questions relating to your calculation methods. You need to be able to produce this information timely and accurately in an organized fashion. You definitely don’t want to keep a lender waiting to hear back from you about the details of your application. Good recordkeeping practices and accounting policies will help you improve your ability to provide documentation quickly, completely, and accurately. Ensure that you can readily produce any type of information such as invoices, corporate documents, taxes, or contractual agreements.
Make Collateral Available
Some lenders will require collateral to secure a loan no matter the circumstances. However, others may weigh collateral in consideration of a more favorable interest rate. Although attaching securities to your small business’ assets may seem like a risky step, it may be also an integral part of securing the financing that you need in order to take your operations to the next level and create better opportunities for future growth.