Apply for an SBA Loan

Apply for an SBA Loan

The Small Business Association (SBA) has never seemed more important than now.  Ever since 1953, the SBA has been the federal agency instrumental in promoting small businesses and entrepreneurs.

Acquiring a loan from the SBA during times of financial difficulties is a good option as it often provides better terms than other available loans, and offers more security to Lenders.  But the SBA loan is not an automatic “grant”, and the paperwork requirements can be a little daunting.

The Victoria Law Group has experience with the SBA Loan process and works with Lenders and Financial Counselors who advise businesses applying for an SBA Loan.  Don’t hesitate to contact us when you are considering applying for an SBA Loan.  If we cannot help you directly, we can refer you to a vetted Counselor.  

Let us now look at the Top 10 questions circling around the topic of a Small Business Administration Loan.

Top 10 questions about the SBA Loan:

“We help great people achieve the American Dream.”

Top 10 questions about SBA Loan:

SBA Loans provide assistance to small businesses and start-ups in order to help them flourish. The Loans are granted by lenders but are guaranteed by the U.S. Government or the SBA which makes them more secure and reliable. The Loans are guaranteed up to 80 percent by the SBA which thereby leads to reduction of risk on the part of the lender. These Loans make it easier for the entrepreneur to access capital.

No collateral is required to apply for an SBA Loan,. If you are looking for financial help for starting your business or you are facing financial difficulties in running your already existing business, applying for an SBA Loan is a good option to consider. SBA low-interest long-term loans are a viable option for business owners who are suffering substantial disaster-related physical or economic damage. It is also available for those who wish to grow their business but are unable to obtain other non-government financing.

The SBA helps you go far beyond the problems associated with the commercial banking system in the sense that SBA does not mandate the entrepreneurs to prove that they have more assets and collateral, a larger cash flow, and a lengthier and more proven credit history.

If you wish to apply for an SBA Express Bridge Loan or any other kind of loan through the SBA, you are required to speak with a representative at your business’s current financial institution.

SBA works as a co-signer to your small business loan. It is a truth that many small businesses often fail due to lack of planning and under capitalisation.

To be eligible for getting an SBA Loan, businesses are required to meet certain criteria put in place by the SBA.

The business must be a small business as per the standards of industry size. Some industry size requirements are based on average annual receipts; other industries are judged based on the number of employees,

If you wish to secure a loan from the SBA, you are also required to submit a loan application to a bank, or other financial company that processes SBA Loans as the SBA makes loans available through participating vendors and provides a government guarantee to the lenders.

To apply for an SBA Loan is very much similar to applying for a regular commercial loan. In case of doubts about procedure or specific steps, businesses may also obtain assistance from SCORE, Small Business Development Centers, Certified Public Accountants (CPAs) and consultants.

Before applying for an SBA Loan, a business should review its credit report as it is significant for a lender to know the character of the borrower. Lenders with a positive track record for paying their obligations are more likely to get loans. Additionally, personal income tax reports for three years will be required for all parties who are owners or partners of the business.

As a small business, you are also required to have a business plan to show in writing about your business terms and future expectations. Along with this, it is advisable to assemble a detailed and complete financial history of your business. The lenders will want to see profit and loss statements for three complete fiscal years and the current year to date along with a balance sheet. You can also prepare financial projections which will enable the lenders

The businesses looking forward to securing an SBA Loan must also contact the lenders who work with the SBA.  A list of local SBA lenders by state is available on the SBA website. You are also required to meet lenders and discuss your business including the loan you are requesting.

7(a) Loan Program: This is one of the most availed loans guaranteed by the SBA. The loan was named after section 7(a) of the Small Business Act. An entrepreneur can borrow up to $2 million through this loan type. There are various sub-types of loans available in this such as Express Programs for businesses owned by members of the military, and the Export Loan Programs available for export businesses.

CDC/504 Loan Program: This loan program provides small businesses with long-term and fixed rate funding. This can be availed for the purpose of buying real estate or machinery, equipment etc. and is thus focused on providing funds for expansion and modernization.  This type of loan is good for a business looking forward to moving out of rental space and buy a small building.

Microloan program: This Microloan Program by SBA may be considered for availing short term loans. The loans may be availed for working capital or even for the purchase of inventory, furniture, fixtures, supplies, machinery etc.

The short answer is that it typically takes an average of 6 months or more through banks and other lenders. However, if you can’t wait that long to get funded, some lenders participate in an expedited process that can close SBA deals in as little as 45 days.

As the first step, you are required to know beforehand the amount of funding required and if self-funding can be a good option in your case. Thereafter you, as an entrepreneur, can begin looking for investors who would be interested to invest in your business ideas, this will enable you to develop your idea into a successful business. You can also look for options such as crowdfunding for setting up your business.

One of the most reliable options to consider is to apply for a Small Business Administration Loan or the loans guaranteed by the SBA. While you would be required to find lenders matching your requirements by yourself, you must also make sure that the lenders you are choosing give SBA guaranteed loans. SBA Loans will enable you to get funds on comparatively better terms than other loan programs.

The Office of Women’s Business Ownership has been set up to help women by way of programs which are conducted through the SBA. While women may apply for all the types of loan guaranteed by the SBA, there exists the 8(a) Business Development program which helps small and disadvantaged businesses compete in the marketplace.

The government has also granted subsidies for the women entrepreneurs who have their own businesses so as to promote them to move out of the mainstream way of working. The National Women’s Business Council is another non-partisan federal advisory council which is serving as an independent source of advice and counsel to the President, Congress, and the U.S. Small Business Administration. The Council works as the only independent voice for women entrepreneurs.

To be eligible for an SBA guaranteed loan, you must be officially registered as a for-profit business, and you must be operating legally. The net income must be less than $5 million along with the tangible worth being less than $15 million. To qualify as a small business, there is a requirement of having fewer than 500 employees, and less than $7.5 million revenue on average each year for the past three years

The SBA Loan is only available for the businesses that are physically based in the United States of America.

Additionally, you are required to be managing and operating your business within the territory of the USA.

There exist other requirements specifically associated with the type of loan you are targeting.