Published on February 13, 2014
How To Apply for An Loan
Loans Are commercial loans which are partially guaranteed by the Small Business Administration.
They are obtained from a financial institution, and not the directly.
Loans Are designed to provide capital to SUCCESSFUL BUSINESS owners who do not have the collateral to get a non-SBA guaranteed loan.
While you can an existing business with SBA loan, they are not loans for starting a new business.
While you can an existing business with SBA loan, they are not loans for starting a new business. (If you need money to start a new business click here to read about other options)
As a result, The standards for obtaining an SBA loan are generally similar to commercial loans, except that less collateral is required.
As a result, The standards for obtaining an SBA loan are generally similar to commercial loans, except that less collateral is required. (You can read about commercial loan requirements here)
Before you begin your application, we recommend you familiarize yourself with the various SBA loan programs by reading our Ultimate Guide to SBA Loans, as well as our guide to special 7a loans.
How to Apply For An SBA Loan (7a SBA Loan)
Determine Eligibility Determine whether or not your business is eligible for the 7a program.
Determine Eligibility Determine whether or not your business is eligible for the 7a program. • You must be a US business with less than 500 employees, operating a for profit. • You must also be able to show that you have a need and good use for the funds. You can find a complete explanation of the SBA’s 7a eligibility requirements here. We also recommend reviewing our guide to special 7a loans
Find a Bank That will disburse and service your loan. The SBA website has an excellent lender search You can also browse through the SBA’s list of their 100 most active lenders.
We recommend talking to multiple banks in order to find one that meets your needs. As you visit banks, we recommend asking the following questions: • What is their total SBA loan volume? •Do they participate in the SBA Preferred Lender Program?
In General your first meeting with your bank will involve exchanging some initial information in order to see if the opportunity meets the bank’s general parameters.
Assemble and Organize Your Paperwork The SBA provides a comprehensive checklist, which you can find here. The main documentation required is:
Assemble and Organize Your Paperwork · · · · · · · · · · Business Financials Profit and Loss (P&L) Statement Projected Financials Ownership and Business Certificate/License Loan Application History Tax Returns Résumés Business Overview and History Business Lease
Assemble and Organize Your Paperwork In addition to documents required by the SBA, David Lucht of Live Oak Bank also recommends putting together a detailed “plan for success”.
Assemble and Organize Your Paperwork In addition to documents required by the SBA, David Lucht of Live Oak Bank also recommends putting together a detailed “plan for success”. To read our full interview with David Lucht, click here.
Fill Out SBA Forms It is time to begin filling out the necessary SBA forms. We have put together comprehensive guides on each form and how to complete them.
Fill Out SBA Forms Form 4: Application for Business Loan – This is the core SBA loan document that requires lots of supporting attachments.
Fill Out SBA Forms Form 4: Application for Business Loan – This is the core SBA loan document that requires lots of supporting attachments. See our step-by-by step guide for ﬁlling out SBA Form 4 here.
Fill Out SBA Forms • Form 912: Statement of Personal History - This form is used to evaluate your character. (Guide) • Form 413: Personal Financial Statement - This form is used to assess the ﬁnancial standing of you and your spouse. (Guide)
Fill Out SBA Forms • Form 159 (7a): Fee Disclosure Form and Compensation Agreement - This form is only necessary if you hired someone to help you with your SBA loan application. It details how much you paid them and the services they provided. (Guide)
Loan Timeline 1. Qualification: Initial Information is exchanged to determine if you meet the bank’s general parameters (1 week) 2. Proposal: Once you are qualified, your bank will give you a proposal 3. Underwriting: If you accept the proposal, you enter the underwriting stage, which includes a detailed analysis, the exchange of lots of information, and a formal approval or decline of your application (1-2 weeks) 4. Closing: Loan terms are finalized and signed. The amount of time is determined by the complexity of deal
Applying for a 504/CDC Loan The forms and required documentation are identical, but there are slightly different eligibility requirements. Furthermore, instead of receiving your loan from a conventional bank, you must apply to one of the SBA’s Certified Development Companies (CDCs). You can find a full list of eligibility requirements here.
Find a CDC Once you have determined that you are eligible for a 504/CDC loan, you must find a CDC to service your loan. The SBA provides an easy to use CDC finder, which will direct you to the various CDCs in your geographic area.
Final Thoughts Applying for an SBA loan can be a complicated process, so the more attention you pay to preparing your documents and forms, the smoother your experience will be.
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