Starting a business calls for capital. If you’ve got personal or investment capital with you, you can then consider acting on your business model. But if you lack those options, you need to look elsewhere, which in most cases is a business loan. There are several business loan programs available in the market. The one that small business owners and entrepreneurs prefer to go for are SBA business loans.
Although SBA loans are known for their simplicity and accessibility, the volatile nature of today’s economy due to the pandemic has made it a bit difficult for entrepreneurs to get the necessary capital as the competition is quite stiff. In this blog, we will share with you some tips to get qualified for SBA loans in 2021. Let’s get started.
Know About SBA Loan Requirements
The first thing you need to know about SBA loans is that SBA does not actually give loans to entrepreneurs. It provides loan to small business owners by working with individual lenders by placing guidelines in place prescribed by partnering organizations and lenders. So, what are the requirements for these loans? You must have given time to your business and invested money into it. You need to prove that you have tried all the other lending options before coming for a SBA loan. Your business should be based in the US and must be for-profit. You also need to prove that you have the ability to pay back the loan in the stipulated time period.
Carefully Check The Checklist of Your Loan Type
There is a world of difference between asking for a loan and applying for a loan. When you apply for a SBA loan, you have to carefully deal with an extensive loan application, a cash projection document, a credit memo, and much more. Keep in mind that the documents you will have to deal with is dependent to a large degree on the loan amount, business’ age, number of borrowers, etc. So, carefully prepare the checklist of your specific SBA loan type.
Have Some Type of Collateral To Offer
Although you can take SBA loan for a variety of reasons such as recovering from COVID-19, getting new staff, buying new technologies, and even buying another business, it is important to note that you will have to offer some type of collateral in order to get the loan. Things that qualify as collateral for a SBA loan include real estate, office equipment, inventory, account receivables, etc. You will have to present collateral if you own 20 percent or more of the business.
Apart from these, you also need to keep in mind your credit score. SBA will definitely take a look at your credit score and if it is below 670, chances of getting a loan are quite bleak then. So, first check your credit score and if it is low, try bettering it before applying for a SBA loan.
There are types within SBA loans such as 7(a) loans, 504 loans, micro loans, and SBA disaster loans. Each of these loans have their own requirements. If you need help getting a SBA loan, get in touch with UT Financial Services, LLC. We have helped countless businesses get this competitive loan. You too can get this loan. To find out more, feel free to contact us on (877) 210-1331.