This spring didn’t just usher in a much-needed respite from one of the worst winters on record; it also brought new hope for the American economy and small business owners in particular.
After years of zero growth, job creation numbers finally trended upward while Recovery Act programs continued to help small businesses (the stimulators of much of this country’s jobs) reclaim access to much-needed business credit.
In fact, this March the SBA reported that small business loan approvals had climbed by 86 percent compared to the weekly average before passage of the Recovery Act. It also claimed to have helped put almost $23 billion into the hands of small business owners and brought more than 1,100 lenders back to SBA loan programs in recent months.
So if your small business has struggled to get financing in the past, or you are thinking of getting a loan to fund new growth, here are some tips to help you understand what SBA loans are available, where to get them, and how to prepare a winning loan application.
What SBA Loans are Available?
There are quite literally hundreds of government-backed SBA loans, each developed to suit the needs of your particular business – whether you need start-up funds, export-assistance funds, are struggling to pay off debt, or are a veteran seeking to start and grow your business.
For more information about these various programs your best source of information is this comprehensive SBA Loans Guide from Business.gov which includes a Loans and Grants Search Tool that matches your specific needs with available loan programs.
If you are worried about your eligibility for a business loan or have a poor credit score, be sure to read Loans for Business Owners with Poor Credit Scores to understand your options.
Who is Lending?
Yes lending is on the rise, but researching and finding the right bank in your own community can be time-consuming, which is why it’s worth talking to your local SBA District Office. They can point you to SBA lenders in your area as well as provide guidance and advice about loan eligibility and application requirements.
If you are doing your own research, try to seek out a bank or credit union that has been through this process before and is either a Certified SBA Lender (CLP) or Preferred Lender. You might also refer to this Business Week slideshow (based on SBA data), which lists the *Top Small Business Lenders of recent years.
Preparing a Loan Proposal
When preparing for a loan, you must prepare a written loan proposal. Lenders look to a loan proposal as evidence that your business has strong management, significant experience, and a thorough understanding of the marketplace. They’ll also look for relevant financial information showing net worth and sales projections that will reflect your ability to repay the loan. Lastly, any lender will want to know about your suppliers, distributors, employees, and manufacturing relationships.
The SBA offers the following tips to help your business improve its chances of obtaining a small business loan with a properly prepared written proposal.