Tips for Not Getting Denied for an SBA Loan
The Small Business Administration is a government agency that provides resources for small and new companies in the United States. They have many loan programs that help you get capital to start your business or survive a financial crisis. Regardless of your purpose, when you apply for these programs, you must carefully fill out your applications or risk an unnecessary denial. Before you submit your application, make sure you’ve taken care of these steps.
Plan Your Requested Amount
When you apply for SBA loans, you must specify how much money you want. If you don’t take time to plan and calculate this number, you may request more money than your lender thinks you can afford, which most likely means you will be denied. Figuring out how much money you need in advance also prevents you from taking on unnecessary debt.
Save for a Down Payment
The amount of your down payment varies depending on your lender, credit history, and requested amount. Some lenders may not require a down payment at all. To be safe, though, save at least 10 percent of the money you want to borrow before you apply for a loan.
Prove You Can Handle a Loan
Your lender is taking a risk when it lets you borrow money. To minimize the chances of you defaulting on your loan, your lender wants to see that your cash flow can handle the addition of a loan. Most lenders request your current financial statement, your tax returns, and your business plan, so make sure these documents are all ready for inspection.
Increase Your Credit Score
SBA loans help companies that don’t qualify for traditional loans. Despite the assistance offered by the government, you still need to meet your lender’s credit score requirements. As you prepare to apply for a new loan, keep up with your other debts so that your credit score does not decrease.
List Your Collateral
To make your lender feel even better about your loan application, list all your assets on your application. Do not leave out anything that could be used as collateral. This shows potential lenders that you are serious about your loan and that you have enough resources to handle a long-term repayment period.
Applying for a loan is a time-consuming process, but if you try to skip steps, your application will probably be declined. To increase your chances of receiving approval for SBA loans, prioritize these tasks.