SBA Loans: 4 Things You Need To Know Before Applying
SBA loans are extremely versatile and can be used by entrepreneurs for everything from capital to equipment and even real estate. However, before meeting with a lender there are a few things every business owner should do to prepare ahead of time.
SBA Loans Require A Plan
If someone asked you for a loan and they told you they had a great business idea, but it was drawn up on a napkin, would you front them the capital? Lenders want to be certain their investments are worth the risk, which is why the guidelines for SBA loans require a thorough business plan. Lenders want to see that business owners have taken the time to perform market analysis, taken into account possible competitors and show how long it will take for the business to start turning a profit. A business plan should be as detailed as possible so lenders can find answers to all of their questions. There are a number of free resources online to help emerging entrepreneurs compile a business plan, including charts, financial forecasts and more.
Register Your Business
Personal and business taxes are handled very differently. As such entrepreneurs need to register their business names and get a separate tax ID. Lenders want to see that you have taken the steps necessary to create a business entity. On a side note, registering a business name also opens the door for company lines of credit which can be a very useful extra source of working capital.
Cleaning Up Your Credit Profile
Applying for SBA loans starts with your personal and business credit profiles. A month or two before you apply for a loan you should get a detailed credit report. Go through the report and make sure there are no outstanding balances owed. Remember that credit agencies are large entities and sometimes amounts owed get caught in the database. If there is a dispute over an amount that was previously paid, get in contact with the credit agency to have the red mark removed. Business and personal credit ratings can influence the amount of financing entrepreneurs receive through SBA loans. The reason we suggest looking at your credit report early on is that any changes made can take up to a month to show up when your lender looks at your history.
Use A Preferred Lenders
Not all lenders are the same. Preferred lenders have the ability to sidestep the red tape of traditional institutions and banks in order to fast-track requests for SBA loans. Wise Commercial Capital is a preferred financial services company among SBA lenders and our professionals will expedite loan requests so you get the financing you need to start and grow a successful business. Contact our offices today to get started.