As a small business owner to be or one that is in existence, but in need of financial backing for growth, the SBA loan application can be complicated. It is important that once an entrepreneur decides upon a loan guaranteed by the small business that they begin the loan process by obtaining the documents required and contact a local lender that deals with SBA loans since they are not a direct lender. Once the documentation has been gathered the loan company with then submit the information to the SBA for approval or denial.
The first piece of documentation that should be completed is the SBA loan application. The business owner should complete this seven page application. Another two page loan application is required to be filled out by the lending company. These applications detail everything about the business, business owner’s finances, information on people of interest in the company and details about investments, debts and other financial documentation.
Another part of the SBA loan application is the personal history and background statement. This goes through the applicant’s personal history. This involves fingerprinting with a criminal history check as well as a credit check being done in regards to the applicant past business ventures and transactions.
It is also required when applying for a SBA loan that the businesses financial statements are included. This is basically a detailing of a signed balance sheet of the company’s profits and losses as well as current statements on the business. Current in this situation is anything within the past ninety days that has relevance to the company’s profits and losses. Supplementary schedules are required on all current statements of finance.
Another piece of documentation that is important is a projected statement of finances. A written explanation of your income goal and a financial explanation with how the company hopes to achieve this goal are required to show that the business has a plan for the money being leant. Another pertinent piece of information that is requires in your loan documentation is information on all interested parties in the business be it ownership and information on affiliates with the business.
Licenses and all business certificates are important and should be documented within the application. Another important document that will need to be included is a loan application history. If you can obtain loans through a bank or private lending institution this needs to be sought out before asking for financing form the SBA. The laws set forth to obtain a SBA loan include equality in hiring and granting products and services. This means that the company cannot participate in discrimination of any kind. In order for a small business to be considered for qualifying for a SBA loan it must be a non dominant business in the field it represents and must be independently owned and operated. Certain criterion also involves the number of employees and annual receipts.
Tax returns from the business shall also be considered in the application checklist as well as personal tax returns. It is important to represent at least three years of history to the SBA. Resumes are also an important piece in the puzzle of obtaining funding from the SBA. Along with a detailed overview of why the funding is needed and how it will help the business prosper the business should also obtain a copy of current lease agreements in regards to the building and the equipment leases.
If the purchase of an existing business is in the works the SBA will need information from the existing business including balance sheets, tax returns, the terms of sale along with a list including the purchase price, inventory, value of machinery/equipment and a list of all furniture and fixtures belonging in the sale.
This information will give the SBA a detailed look into the business covering the entire picture on what the owner is basing his attempt for funds for. When looking at the provided information there should be little doubt as to the success of the businesses in order to obtain a loan from the SBA. After going through the documentation requires obtaining a loan the small business entrepreneur should also have zero doubt about the substance on which the small business will be running.