If you are a small business owner you have a few options available to you when it comes to funding your new company. You could seek out the financial assistance of your family or friends, and many new businesses are started this way. Also, you could try to take on business partners with more financial resources than you, or venture capitalists as well. These are all good options, but many new owners decide to go it their own and instead borrow money to pay for their initial expenses. A great way to go about acquiring your own funding is to get an SBA loan, but how do these work? We will answer this question in today’s discussion.
First, it is important to note that the SBA is a federally run organization, and that they are not a lender. Instead their capacity is more to consult new business owners. They do this by helping new business owners in two very important ways.
First, they help you plan your business. You may have a great idea of what you would like to do, but chances are if you haven’t formally sat down and plotted out all your potential expenses and accurately measured your revenue and profit margins you are not painting an accurate picture of your future venture. Having a formal business plan helps you do this, and although this is a commonly skipped over step I highly recommend that you take the time to do this. The SBA has a business plan consulting service which can be very helpful when it comes to getting this step right. Looking at your idea objectively can you save you a lot of trouble in the long run.
Once you have your formal plan, you can take it to get an SBA loan. These loans are simply structured to meet preexisting criteria set up by the small business administration. A lender wishing to participate in the program, offer loans of this type, and this is beneficial to lenders and potential borrowers alike.
This is what the SBA does in short. First, they help you setup the formal structure of your company by assisting you in the creation of an accurate and object business plan. Second, they help you take this new plan, along with whatever other information is requested, and bring it before potential lenders in order to get the necessary funding for your company. By using this resource you should be able to streamline the process of getting funding.