SBA Loan

5 Tips to Successfully Obtain an SBA Loan

Building a new business takes effort, but even more so, it takes financial capital. There are the initial outlays of capital to get a business started, then various loans to assist in financing growth and expansion efforts. Small Business Administration (SBA) loans are meant to provide a means to address both of those capital needs. These loans are guaranteed, thus reducing the risk for lenders.

However, working through the application process can be intimidating, especially if you are a new business owner. Here are 5 tips to successfully obtaining an SBA loan.

Keep Your Documents in Order

One of the realities of an SBA loan application is that they want to know all about the financial state of your business. The application process will go easier if you make it a regular part of your processes to keep your financial, accounting, and tax records up-to-date. You should also make sure there are systems in place to keep your records organized. Do not ignore your books, just because your business has picked up. It could make your application process more complicated.

The Credit of Your Business

When you think of credit score, you often think of your FICO score. However, businesses also have a credit score. By paying your business’ bills and accounts on time, you build credit criteria for your company. You also need to make sure your credit is in good shape. Avoid bankruptcies, foreclosures, and late payments.

Work with a lender and find a loan that you have a high likelihood of being approved for before they do the hard pull of your credit. Applying for multiple loans in a short period can result in several hard pulls that can negatively impact your credit score.

Understand What Type of Financing You Need

Many business owners believe that SBA loans are difficult to get, but the reality is that an SBA loan has higher standards and will take up to 90 days to complete. However, a line of credit or merchant cash advance has requirements that are less strict.

Therefore, it is important to determine what you need for your business. Mortgage and financial experts can help you to understand the financial needs of your business and help you to determine if a working capital loan is necessary or if a line of credit would be a better fit.

How is Your Cash Flow?

If you are going to use an SBA loan to purchase commercial real estate to have a home for your business, it is important to understand that your cash flow is going to pay a key part in the application process. Therefore, it is important to demonstrate that your business can handle the additional payment and still maintain a positive cash flow.

The Impact of Your Business Size

Finally, it is important to understand how the SBA determines the size of a business and whether it qualifies as a small business. The reason is that you could be spending the time to secure financing without meeting this critical criterion. Working with your lender, you can determine what loans you are eligible for and if they will meet the needs of your business.

For businesses in New Jersey, Pennsylvania, New York, Maryland, and Florida, Penn Commercial Capital can be your guide to the SBA loan process. Our knowledgeable and experienced team can help you find the financing to fit your needs. Contact us today!

Penn Commercial Capital can help you secure your next round of financing or business loan efficiently and ethically. We’re proud to champion the small businessperson and can finance clients seeking loans from as little as $100,000 up to $100 million.