Tips for Applying for an SBA Loan

Tips for Applying for an SBA Loan

May 13, 2020

The process of applying for a loan with the Small Business Administration (SBA) can be rather complex and take months to complete, but it is one of the best tools available for small business owners to get the funding they need to establish and grow their business.

Here’s a quick overview of some SBA loan tips in Hayward, CA that can help you in your mission to get approved:

  • Determine eligibility: First and foremost, you need to make sure your business is actually eligible to get a loan through the SBA. You’ll need to have good to excellent personal credit, have been in operation in an eligible industry for at least two years, have no history of defaulting on government loans, have proof you haven’t been able to get funding from other lenders and meet the administration’s definition of a “small business.” Owners must also have put a certain amount of equity into the business.
  • Select the program: Most businesses will go through the SBA 7(a) program, which covers several types of SBA loans. Most commonly, it gives you a term loan valued at up to $5 million that qualifying business owners can use for a wide variety of purposes. But there are other loan programs as well, and it’s important for you to carefully investigate your options to determine which best suits your needs.
  • Connect with a lender: The SBA oversees the loan process, but it does not actually administer the loans itself. Instead, it connects applicants with approved lenders who then provide the loan and process the application on the SBA’s behalf. You can search for lenders on your own if you wish, but there are also some helpful referral services you can find online. If you don’t have any experience with lending for your business or lack the time to do the research yourself, working with these services can be highly beneficial.
  • Organize your documents: You’re going to need to gather and organize a lot of different documents and information to support your loan application. You’ll need to provide information about the amount of money your business wishes to borrow and how you’ll use that money. You’ll also need documents containing cash flow statements, financial projections for several years, P&Ls, balance sheets, two to three years of tax returns (personal and business), personal financial statements for each owner or partner, resumes for each owner or partner, proof of ownership, any applicable licenses and leases and a full business plan.
  • Apply: Once you’ve gathered all the information and supporting documentation you need, you can proceed with filling out the application and the appropriate forms, which will depend on your loan type, business type and owner backgrounds.

If you’re in need of guidance as you go through the process of applying for SBA loans, or simply need some SBA loan tips in Hayward, CA to get yourself moving, we encourage you to reach out to Menjivar & Company CPAs, Inc. with any questions. We’d be happy to assist in any way possible!

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