If you are trying to get funding for your small business, you will likely benefit from checking out the SBA to see how their loan program works. In brief, they are a special set of loans designed for small companies. Typically, such small companies are in special circumstances that make it difficult to get funding from private capital markets. We’ll discuss this a bit more in today’s article.
Large banks have certain criteria that apply to almost all of the lending they do. You must be in business for a certain number of years (10+ is considered standard), you must have a good business credits score (separate from your personal credit), and you must have over a certain revenue threshold (which differs from bank to bank).
Obviously, if you are just starting off, this funding is basically unavailable to you. This is why the SBA was established in 1953. Under this program, special funding resources have been allocated, due to federal subsidies, to assist those companies that do not meet the required criteria.
So, how do SBA loans work? You’ll want to start by contacting your local Small Business Administration Office to ask to speak to a counselor to look over your case. They should assign an agent to look over your financial paperwork. The agent will also make suggestions on what to improve and what else should be added for funding consideration.
They also have a myriad of other resources for you. You should make sure to ask about them. In fact, they can help you make a business plan. Once you have your paperwork and business plan, your counselor will help you submit this information for review to banks who might be a good fit. If you are accepted, you’ll have to finish the required paperwork, and then you’ll get funded.