If you are starting a new business you have no doubt heard about the small business administration and their loan program. But what is the SBA loan process and what can you do to get started? We will address these questions in today’s article.
First, to qualify for a loan of this type and start the SBA loan process you must meet certain criteria. These loans are designed specifically for small businesses which are defined as companies with revenue under $100,000 typically. The criteria changes over time and you should discuss the current details with your local chapter of the small business administration. Typically however if you have revenue under this amount and fewer than 500 employees you are considered to be a small business.
Another requirement to qualify for the program is to have a business plan. A business plan is a formalized document which outlines all of your estimated future costs as well as future profits. This is essential in obtaining funding under most circumstances and is specifically required to qualify for the program. As such the SBA offers business plan consulting services free of charge. This is a very helpful service for new businesses as not only will it show you your total cost and future profits it will also show you where perhaps your assumptions were incorrect or misguided.
Once you have your business plan and assuming that you qualify by Mimi criteria mentioned above, you are ready to begin the application process. Throughout the process you will be asked to furnish some additional information about your company which will be used in determining whether or not you qualify for the specific loan which you are requesting. It is important to note that although these loans are pre-approved by the small business administration, individual lenders are not required to release funding if they do not feel that you meet their specific requirements. The purpose of the program is to streamline the process of helping qualified borrowers get in front of interested lenders for the purpose of creating a loan agreement.
So to begin the SBA loan process you must first qualify as a small business. If this is the case you will next need to create a formal business plan which you will submit to the lender at the time that it is requested. The lender will likely require additional documentation which you should furnished upon request. Finally you will have to meet the specific criteria for whatever loan you are attempting to get, and if you do you should be dispersed funding for your company.