Because of their low interest rates, versatility, and other attractive features, SBA loans are highly sought after by small businesses. This article looks at how you can boost your business’s chances for approval.

Eligibility Requirements

There are some up-front eligibility requirements that a business needs to meet. According to the SBA itself, a business must be a legally registered for-profit business that operates and is located in the United States. Additionally, the business’s owner must have “invested their own time or money into the business,” and the business needs to have explored other financing options to no avail.

Know How the Process Works

It’s important to know that an SBA loan does not come directly from the SBA; instead, the money comes from a lender that the SBA works with by guaranteeing a portion of the loan. The takeaway point is that you should be ready to work with both the SBA and individual lenders.

Build Up Your Credit, Collateral, and Cash Flow

One SBA official has identified credit, collateral, and cash flow as key for obtaining a loan backed by the SBA. In other words, a strong credit history will go a long way, as can the ability to put up assets of your own to help secure the loan. Examples of assets that can serve as collateral include real estate and equipment.

Meanwhile, lenders will also want to see that you have enough cash flow to honor your monthly payments.

Gather the Documents

Applying for an SBA loan requires a plethora of documents. Here is a sampling of what you’ll need:

• Identification (like a driver’s license). 
• Business and personal tax returns. 
• Voided check from your business. 
• Profit and loss statements. 
• Your business’s balance sheet. 
• Your business’s debt schedule.  

Additionally, your business plan will play a huge role in your chances of SBA loan approval. Lenders will want to see that your business has a realistic, well-thought-out strategy.

Interested in talking to a financing expert about your business’s options? Get in touch with Increase Lending today.