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The U. S. Small Business Administration #home #loans #for #bad #credit

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Borrowing Money

After you have developed a cash flow analysis and determined when your business will make profit. you may decide you need additional funding. Borrowing money is one of the most common sources of funding for a small business, but obtaining a loan isn’t always easy. Before you approach a lender for a loan, you will need to understand the factors the bank will use to evaluate your application. This page outlines some of the key factors a lender uses to analyze a potential borrower.

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Types of Financing

There are two types of financing: equity financing and debt financing. When looking for money, you must consider your company’s debt-to-equity ratio. This ratio is the relation between dollars you have borrowed and dollars you have invested in your business. The more money owners have invested in their business, the easier it is to obtain financing.

If your firm has a high ratio of equity to debt, you should probably seek debt financing. However, if your company has a high proportion of debt to equity, experts advise that you should increase your ownership capital (equity investment) for additional funds. This will prevent you from being over-leveraged to the point of jeopardizing your company’s survival.

Equity financing (or equity capital) is money raised by a company in exchange for a share of ownership in the business. Ownership accounts for owning shares of stock outright or having the right to convert other financial instruments into stock. Equity financing allows a business to obtain funds without incurring debt, or without having to repay a specific amount of money at a particular time.

Most small or growth-stage businesses use limited equity financing. Equity often comes from investors such as friends, relatives, employees, customers, or industry colleagues. The most common source of equity funding comes from venture capitalists. These are institutional risk takers and may be groups of wealthy individuals, government-assisted sources, or major financial institutions. Most specialize in one or a few closely related industries.

Debt financing means borrowing money that must be repaid over a period of time, usually with interest. Debt financing can be either short-term, with full repayment due in less than one year, or long-term, with repayment due over a period greater than one year. The lender does not gain an ownership interest in the business, and debt obligations are typically limited to repaying the loan with interest. Loans are often secured by some or all of the assets of the company. In addition, lenders commonly require the borrower’s personal guarantee in case of default. This ensures that the borrower has a sufficient personal interest at stake in the business.

Loans can be obtained from many different sources, including banks, savings and loans, credit unions, commercial finance companies, and SBA-guaranteed loans. State and local governments have many programs that encourage the growth of small businesses. Family members, friends. and former associates are all potential sources, especially when capital requirements are smaller.

Traditionally, banks have been the major source of small business funding. The principal role of banks includes short-term loans, seasonal lines of credit, and single-purpose loans for machinery and equipment. Banks generally have been reluctant to offer long-term loans to small firms. SBA’s guaranteed lending programs encourage banks and non-bank lenders to make long-term loans to small firms by reducing their risk and leveraging the funds they have available.

Ability to Repay

The ability (or capacity) to repay the funds you receive from a lender must be justified in your loan package. Banks want to see two sources of repayment—cash flow from the business as well as a secondary source such as collateral. The lender reviews the past financial statements of a business to analyze its cash flow.

Generally, banks are more comfortable offering assistance to businesses that have been in existence for a number of years and have a proven financial track record. If the business has consistently made a profit and that profit can cover the payment of additional debt, it is likely that the loan will be approved. If however, the business is a start-up or has been operating marginally and has an opportunity to grow, it is necessary to prepare a thorough loan package with a detailed explanation including how the business will be able to repay the loan.

Credit History

When a small business requests a loan, one of the first things a lender looks at is personal and business credit history. So before you even start the process of preparing a loan request, you want to make sure you have good credit.

Get your personal credit report from one of the credit bureaus, such as TransUnion. Equifax or Experian. You should initiate this step well in advance of seeking a loan. Personal credit reports may contain errors or be out of date, and it can take three to four weeks for errors to be corrected. It is up to you to see that corrections are made, so make sure you check regularly on progress. You want to make sure that when a lender pulls your credit report, all the errors have been corrected and your history is up to date.

Once you obtain your credit report, check to make sure that all personal information, including your name, Social Security number and address is correct. Then carefully examine the rest of the report, which contains a list of all the credit you obtained in the past such as credit cards, mortgages, student loans and information on how you paid that credit. Any item indicating that you have had a problem in paying will be toward the top of the list. These are the credits that may affect your ability to obtain a loan.

If you have been late by a month on an occasional payment, this probably will not adversely affect your credit. But it is likely that you will have difficulty in obtaining a loan if you are continuously late in paying your credit, have a credit that was never paid, have a judgment against you, or have declared bankruptcy in the last seven years.

A person may have a period of bad credit as a result of divorce, medical crisis, or some other significant event. If you can show that your credit was good before and after this event and that you have tried to pay back those debts, you should be able to obtain a loan. It is best if you write an explanation of your credit problems and how you have rectified them, and attach this to your credit report in your loan package.

Each credit bureau has a slightly different way of presenting your credit information. Contact the bureau you used for more specific information how to read your credit report. If you need additional help in interpreting or evaluating your credit report, ask your accountant or a local banker.

Equity Investment

Don’t be misled into thinking that a start-up business can obtain all financing through conventional or special loan programs. Financial institutions want to see a certain amount of equity in a business.

Equity can be built up through retained earnings or by the injection of cash from either the owner or investors. Most banks want to see that the total liabilities or debt of a business is not more than four times the amount of equity. So if you want a loan for your business, make sure that there is enough equity in the company to leverage that loan.

Owners usually must put some of their own money into the business to get a loan. The amount of financing depends on the type of loan, purpose and terms. Most banks want the owner to put in at least 20 to 40 percent of the total request.

Having the right debt to equity ratio does not guarantee your business will get a loan. There are a number of other factors used to evaluate a business, such as net worth, which is the amount of equity in a business, which is often a combination of retained earnings and owner’s equity.


When a financial institution gives a loan, it wants to make sure it will get its money back. That is why a lender usually requires a second source of repayment called collateral. Collateral is personal and business assets that can be sold in case the cash generated by the small business is not sufficient to repay the loan. Every loan program requires at least some collateral. If a potential borrower has no collateral, he/she will need a co-signer who has collateral to pledge. Otherwise it may be difficult to obtain a loan.

The value of collateral is not based on market value; rather, it is discounted to take into account the value that would be lost if the assets had to be liquidated. This table gives a general approximation of how different forms of collateral are valued by a typical lender and the SBA:

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Aburt’s “Ultimate” Loan Comparison Tool

Hi, I’m Dr. Andrew Burt. I’m CEO of TechSoft. a custom software/web design company. I wrote this loan comparison tool when my family was looking for a loan, and I realized how difficult it was to compare loans accurately. All the loan comparison tools I found on the net were poor they didn’t take into account a lot of really important factors that could change the outcome, and cost people needless money.

Since I wanted to know the right answer, I wrote this tool to find out. Then I figured others could benefit from it too, so I put it up on the web.

The kinds of questions this page can help you with are: Which loan is better? Should you refinance your mortgage? (Lower monthly payments aren’t the whole picture.) Buy vs. lease? Pay cash vs. borrow? — all these questions have the same thing in common: There are so many factors they’re hard to decide. Moreover, one choice may be better only after a certain number of years — if you’ll sell before then, you made the wrong choice. Unfortunately, the wrong decision can cost you thousands of dollars.

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Tips for Getting Your Small Business Loan Request Approved (Even in Today s Economy)

By Caron Beesley Published: August 18, 2010

Note: The ARRA (Recovery Act) initiatives and/or programs referenced in this article will expire on September 30, 2010. Any statements about qualifying time periods, or extensions of these dates, as they pertain to the availability of ARRA programs are over-ridden by the expiration of the Act on September 30, 2010.

While signs of an economic recovery are still somewhat hard to detect on Main Street, there are some indications that credit is poised to trickle out to small businesses again. The newly published Intuit Future of Small Business Report- Credit Outlook reports that ‘. credit remains available to fuel small business dreams, if you know where to look- and how to qualify’.

Intuit’s research is based on interviews with small business owners seeking credit and the banks and lenders who can provide it. And, while they note that credit remains tight, they suggest that businesses ‘. that can demonstrate the ability to manage assets and cash flow will find credit is still available, although not unlimited.’

Combine this research with the steady flow of new and revised loan programs that have come out of the Small Business Administration (SBA) since the passing of the American Recovery and Reinvestment Act (ARRA), and it could just be the right time for many small business owners to tread (albeit tentatively) back into the loan market once more.

But knowing how to position yourself as an attractive and viable investment for banks and lenders is going to require a lot more planning and preparation than was required in the days when banks were a lot more ‘credit happy’.

If you are seeking a business loan, whether a traditional loan or one backed by the SBA, here are some tips to help you position yourself as a fiscally responsible candidate.

1. Research Potential Lending Institutions

To stand the best chance of succeeding with your loan application it will help to approach a bank that is familiar with your industry and target market. Your local Chamber of Commerce, Small Business Development Center. or other business networking group should be able to point you in the right direction. You may also benefit from approaching smaller community banks, as opposed to the larger national banks. They can often put a face to the application process, and, since they operate in the same locality, there is a good chance that they will have prior knowledge of your business.

You should also focus on banks that participate in SBA-guaranteed loan programs – the ARRA has enabled the SBA to increase its guarantees to lenders, while easing up the fees that business owners face (more here ).

SBA loans- as well as the recently announced ARC Loan Program and changes to the 504 Loan Program – cover a wide variety of business needs including start-up costs, business expansion, supplies and machinery.

More established businesses can benefit from traditional loans not backed by the SBA, but do consider that the government, through the ARRA, is offering up significant risk-reduction incentives for banks to opt for SBA-backed loans. So you may find that your bank steers you in that direction regardless.

2. Gather all your Documentation

Before you start applying for loans, you should gather some basic documentation about you and your business- such as a demonstrably good income record. This Business Loan Checklist from includes some of the typical items you will need for any small business loan application.

3. Prepare Your Loan Application

Most banking institutions will have separate loan application processes, but if you are pursuing an application for an SBA loan, there are specific types of information that you’ll need to provide. And remember, you must work through your bank for an SBA loan. The SBA itself doesn’t provide direct loans; your lender will submit your loan package to the SBA for approval.

This SBA Loan Application Checklist from the government will help you understand what the loan application process entails and what forms you will need. You can also read this post- How to Prepare a Loan Proposal – for quick tips and advice.

4. Prepare and be Polished at Your Loan Application Interview

Whatever your motives for needing a business loan, present a positive and professional demeanor at the interview. Be prepared for a variety of questions and make sure you can back up all your loan application claims with facts.

You are selling yourself, your confidence in your business plan, as well as your ability to make good on your loan. Communicate clearly how much money you need, what you intend to use it for and exactly where the business loan will be allocated (premises versus equipment versus staff, and so on). Prepare your repayment plan and be sure to include it in your documentation.

It costs nothing to talk to your local SBA office or Small Business Development Center (SBDC). Each has experts on hand to help you navigate the loan approval process; it’s also likely that they will have their fingers on the pulse as to which strategies work well in recessionary times.

Many SBDCs also offer up free resources including small business events and seminars as well as books and publications on an array of business subjects. Some even offer computer workstations that you can use to conduct market research, create business plans, evaluate your company’s financial statements, and more.

Use these links to find your local SBDC and SBA office.

Good luck!

Additional Resources

  • Loans and Grants Tool This government tool lets you find what loans and grants your small business might be eligible for.
  • SBA Recovery Act Agency Plan (published in May, 2009)- This plan outlines the agency’s goals for using its $730 million in stimulus money to help small businesses ‘recover, start, build and grow’.
  • SBA Recovery Act Information Portal – This site includes links to fact sheets, loan information, podcasts and more.

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To apply for an RV loan, you must:

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Business Loan Opportunities for Military Veterans in 2014

By Katie Murray Published: January 22, 2014

The service of veterans has done a tremendous amount for the United States – on our own soil and around the world. Many continue their contributions to the country by channeling their skills and leadership into entrepreneurial endeavors that help strengthen our economy.

And now through the rest of the fiscal year, SBA’s Express Loan Program will make it easier to get loans in the hands of veterans so they can succeed in their business ventures.

Through the end of September, SBA has set the borrower upfront fee to zero for all veteran loans authorized under the SBA Express program, which supports loans of up to $350,000.

Additionally through the end of the fiscal year, fees on all loans (and not just for veterans) $150,000 and under are set to zero.

These initiatives make the loans cheaper for the borrower, which is just another way SBA is looking to serve small business owners – and those veterans who have served us – as they look for ways to access capital.

About the Express Loan Program

One great feature of the Express Loan Program is that it has an accelerated turnaround time for SBA review. You’ll receive a response to your application within 36 hours.

With a fast turnaround, streamlined process and easy-to-use line of credit, this program is SBA’s most popular loan delivery method – nearly 60 percent of all 7(a) loans over the past decade being authorized through the program. Since the program began, it has also been one of the most popular delivery methods for getting capital into the hands of veteran borrowers.

Getting started

Interested in exploring loan options to get your business started? Check out these loans that fall under Express Program standards. Our business loan checklist can also help prepare you for the application process, in addition to taking a look at the credit factors lenders will consider when you apply for an SBA-backed loan.

In the transition from military service to customer service, you’ll find great resources from SBA to help you find success. And if you’re looking for funding to get your business off the ground, these loan perks may make it possible to do just that.

Related Resources

The Truth About Payday, Pawnshop and Car Title Loans – US News #auto #loan

#compare payday loans

The Truth About Payday, Pawnshop and Car Title Loans

They may put you in worse financial shape than when you started.

Desperate times call for desperate measures. Lost explorers may resort to eating bugs to survive, pressured athletes may cheat to win and those in financial trouble may take on dangerous loans to tide them over until they’re financially stable. What they may not realize is that these seemingly innocent loans often cause consumers to end up in worse shape than when they started.

It’s easy to understand why consumers flock to payday, pawnshop and car title loans – on the outside, they just look like convenient ways for people with subprime credit to borrow money. However, there’s no such thing as easy money. Read on to learn the truth about these three risky loans, and find some alternatives you should consider instead.

Payday Loans

How they work: The payday loan process usually begins with you writing a post-dated check for the loan amount plus interest and fees. When the loan is due, the lender collects the balance unless you choose to roll the loan over (in exchange for more fees, of course).

Why they’re dangerous: These loans boast notoriously high interest rates that make it almost impossible for borrowers to pay off their balance on time. Even if they pay a small amount each payday, this often just covers the interest and fees, leaving the balance intact. Richard Cordray, the Consumer Financial Protection Bureau director, said in a statement last year that payday loans are long-term, expensive debt burdens: “For too many consumers, payday and deposit advance loans are debt traps that cause them to be living their lives off money borrowed at huge interest rates .” It should come as no surprise that payday loan borrowers often find themselves needing to rollover or take on new loans, trapped in a vicious cycle of debt.

Pawnshop Loans

How they work: Pawnshop loans typically involve you giving the pawnshop an item that you own (like a television, piece of jewelry or computer) as collateral, and the pawnshop lends you a percentage of the item’s value.

Why they’re dangerous: These loans are short-term and typically have very high interest rates and a variety of fees. If at the end of the loan period you can’t afford to pay the balance plus interest and fees, the pawnshop may keep your item and sell it.

Car Title Loans

How they work: Like pawnshop loans, car title loans use one of your possessions (in this case, your automobile) as collateral to secure a short-term loan for a fraction of what your car is worth – provided that you own the car free and clear. Just sign over the title of your car, and hand over a set of keys.

Why they’re dangerous: As with payday and pawnshop loans, these secured loans typically come with very high (often triple-digit) interest rates and loads of hidden costs, from storage fees to repossession fees. This brings up another huge red flag – if you miss just one payment, fail to pay the fees or aren’t able to pay the interest accrued on the loan by the end of the term, your car could be sold or repossessed. Also, since title loans are often only 30 days long, borrowers only have a short amount of time to pay the principal, interest and fees. Since they usually aren’t able to pay everything back when it’s due, they often renew the loan and the nightmare begins all over again.

How Do These Loans Affect My Finances?

The most redeeming qualities about secured loans are that lenders typically won’t check your credit, and the loans aren’t reported to the credit bureaus. But while you’re frantically trying to gather enough money to pay off those loans, you may neglect paying off things that do affect your credit. So while they may not directly affect your score, know that secured loans can still cause trouble for your credit health .

Alternative Options

Even if you’re strapped for cash, you don’t need to agree to ridiculously high interest rates. Instead of taking on risky loans, consider these other options:

  • Short-term loan products: Small banks or credit unions may offer you loans with better rates and repayment terms.
  • Asking for an extension: If you call your creditors before you miss a payment, they may be willing to give you a due-date extension or work out a payment plan.
  • Borrowing from loved ones: It may be uncomfortable, but asking friends or family for a loan could still be a better alternative than secured loans. Just be sure to pay them back – you don’t want to burn bridges.
  • Payday advances: If you have a benevolent employer, try asking for a payday advance. Since it’s your money, not a loan, you’ll save money on interest.
  • Emergency assistance programs: You may find emergency assistance from community organizations or social services programs. Contact your local Department of Human Resources to inquire about options.
  • Cash advances on credit cards: While not ideal, the 25 to 30 percent in interest you may be charged for a cash advance is certainly better than triple-digit interest via the loans covered earlier.

Final Thoughts

Personal finance experts always recommend building up an emergency fund so you can avoid dangerous situations that are hard to escape. If you’re not desperate for money yet, don’t wait until an emergency strikes. Avoid living paycheck to paycheck at all costs, even if you have to trim your spending and live less comfortably.

If you’re in a situation where you need to borrow money quickly, don’t let emotions lead to rash decisions. Assess whether you’ll realistically be able to repay the loan or not, and be wary about lenders who don’t check your credit or income to make sure you can afford the loan. Other red flags include loans that have astronomically high APRs, loans that don’t advertise the APR and situations in which funds can be automatically deducted from your checking account.

It may seem hopeless, but you can get through this tough time without taking on a secured loan. Just remember: Evaluate your options, know what you’re getting yourself into and breathe.

Jenna Lee is the social media manager for a free credit monitoring website that helps more than 22 million people access their credit score for free.

The U. S. Small Business Administration #motorcycle #loan #rates

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Is Bad Credit Stopping You from Getting Business Loans?

By Marco Carbajo Published: March 11, 2014

In a recent report. over 63% of business owners attempting to find funding say they most often targeted banks. Unfortunately, the success among these respondents of actually getting a business loan was a low 27%.

However, recent news suggest small business owners considered creditworthy are discovering it to be easier to get business loans from traditional banks. This is good news for the economy since access to funding for small businesses is a part of job and economic growth.

Unfortunately, bad credit plagues a large percentage of small business owners as a result of the financial crisis several years back. The fact remains that it’s harder for smaller businesses ­– even with stellar credit ratings ­– to get traditional bank loans than it is for larger businesses.

Access to capital is the single largest roadblock most business owners face when growing their business. With a business loan . these businesses can hire new employees, purchase additional inventory, buy or upgrade equipment and increase their marketing efforts.

So what can a business owner do if bad credit is preventing them from getting a business loan?

The good news is there are alternative funding programs and solutions providing business owners the opportunity to obtain a business loan or line of credit regardless of having bad personal credit. Instead, other factors are taken into consideration such as bank deposit history, credit card sales, credit partners and other data sources.

Here are several factors that can get you a business loan regardless of having bad credit:

Bank deposits – A business with regular bank deposits can put its cash flow to work with revenue-based loans . This program is based on the deposits going into the business bank account on a monthly basis. Typically, a business can obtain a business loan equal to 10% of its annual gross deposits regardless of having bad credit. Another benefit of this program is the time it takes to get funded, which is approximately 7 business days.

Keep in mind the loan term can be as long as 18 months with this program, with rates slightly higher than a traditional bank rate. It requires no collateral, financials or tax returns. Repayments are made in small increments every day via ACH from the business bank account.

Credit card sales – This type of funding program, known as a merchant cash advance, provides businesses with upfront cash in exchange for a portion of future credit card sales. For businesses that have regular monthly credit card sales but struggle with bad personal credit, a merchant cash advance may be a viable option.

However, be very selective on what merchant cash advance provider you select. Some providers can cost as high as 38% while others can be as low as 12%. In addition, when it comes to repayment, the majority of merchant cash providers take a fixed percentage of your daily credit card receipt volume until the advance you took is paid back. Other business cash advance providers may offer a fixed monthly installment payment for its repayment method.

Credit Partner – Using a business partner(s) as a credit partner for obtaining lines of credit in the form of business credit cards can be a viable solution to overcome a personal credit challenge. A business partner who has strong credit scores is the best place to look. You may also want to consider someone who may be interested in participating in your business as a potential credit partner.

This method does bring risk to the credit partner because they are cosigning with the business to obtain funding. However, it’s important to note the type of unsecured business credit cards I am referring to will not appear on the personal credit reports of the cosigner unless they go into default.

There are many other types of funding programs that offer small business owners the opportunity to get business loans or access to cash without having perfect credit or subjecting themselves to all the rigorous analysis, cumbersome paperwork, lengthy process and aggravating timelines that comes with a traditional business loan.

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#how to get a small business loan

Business Loan Checklist

The SBA is not your only source for small business loans. State and local economic development agencies as well as numerous nonprofit organizations provide low-interest loans to small business owners who may not qualify for traditional commercial loans. This page will help to ensure that you are prepared when you decide to apply for a small business loan.

Documentation Needed for Small Business Loan Applications

While every loan program has specific forms you need to fill out and documents you need to submit, you will likely need to submit much of the same information for different loan packages. Before you start applying for loans, you should get some basic documentation together. The following are typical items that will be required for any small business loan application:

Personal Background. Either as part of the loan application or as a separate document, you will probably be asked to provide some personal background information, including previous addresses, names used, criminal record, educational background, etc.

Resumes. Some lenders require evidence of management or business experience, particularly for loans that are intended to be used to start a new business.

Business Plan. All loan programs require a sound business plan to be submitted with the loan application. The business plan should include a complete set of projected financial statements, including profit and loss, cash flow and a balance sheet.

Personal Credit Report. Your lender will obtain your personal credit report as part of the application process. However, you should obtain a credit report from all three major consumer credit rating agencies before submitting a loan application to the lender. Inaccuracies and blemishes on your credit report can hurt your chances of getting a loan approved. It’s critical you try to clear these up before beginning the application process.

Business Credit Report. If you are already in business, you should be prepared to submit a credit report for your business. As with the personal credit report, it is important to review your business’ credit report before beginning the application process.

Income Tax Returns. Most loan programs require applicants to submit personal and business income tax returns for the previous 3 years.

Financial Statements. Many loan programs require owners with more than a 20 percent stake in your business to submit signed personal financial statements. You may also be required to provide projected financial statements either as part of, or separate from, your business plan. It is a good idea to have these prepared and ready in case a program for which you are applying requires these documents to be submitted individually.

Bank Statements. Many loan programs require one year of personal and business bank statements to be submitted as part of a loan package.

Collateral. Collateral requirements vary greatly. Some loan programs do not require collateral. Loans involving higher risk factors for default require substantial collateral. Strong business plans and financial statements can help you avoid putting up collateral. In any case, it is a good idea to prepare a collateral document that describes cost/value of personal or business property that will be used to secure a loan.

Legal Documents. Depending on a loan’s specific requirements, your lender may require you to submit one or more legal documents. Make sure you have the following items in order, if applicable:

Business licenses and registrations required for you to conduct business

Articles of Incorporation

Questions Your Lender Will Ask You

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6 Step Guide- How to Get a Business Loan

By Natale Goriel Published: September 04, 2013

Money is the lifeline of any business, so whether you’re starting a business or running an existing one, securing financing is a major factor, especially for small businesses.  Many budding entrepreneurs find the task daunting and don’t even know where to begin.

Here’s a simple yet practical guide on how to go about preparing to apply for a small business loan.

1.    What criteria do banks look for in making small business loans?

Different banks or lending institutions may have different standards, but in general, in order to consider your application for a small business loan, banks will require:

  • The loan must be for a sound business purpose. For SBA-guaranteed loans. the business must be eligible based on size, use of loan proceeds and the nature of the business (no lending, speculating, passive investment, pyramid sales, gambling, etc.)
  • You and your partner(s) are of good character, have experience and good personal and/or business credit history
  • Ability to pay back the loan- reasonable to strong collateral (personal and business assets) is very important. SBA expects the loan to be fully secured, but we will not decline a request to guaranty a loan if the only unfavorable factor is insufficient collateral. And of course, owners must have personal equity investment in the business/skin in the game.

2.    What information will you need?

Different lenders may require more or fewer documents, but in general, you will need:

  • Personal and business credit history
  • Personal and business financial statements for existing and startup businesses and as well as a projected financial statements
  • Strong, detailed business plan (including personal information such as bios, education, etc.)
  • Cash flow projections for at least a year, and
  • Personal guaranties from all principal owners of the business

3.    How can you set yourself up from the beginning to make the process easier? (i.e. accounting systems, etc.)

Be prepared; be thorough; be truthful.

  • Choose your lending institution carefully. Larger banks tend to shy away from small loans as they are less profitable and take the same amount of underwriting and servicing. That doesn’t mean large banks do not make small loans; it is just more difficult.
  • Approach banks or lending institutions you have worked with or are a customer of
  • Explore community banks and Credit Unions
  • Talk to a lending officer and find out exactly what documentation they require
  • Be thorough, bring everything they ask. Many loan applications are denied or face unnecessary hurdles because of incomplete applications.

Even before you start gathering and organizing the information required by lenders to consider your application, you should educate yourself regarding business loans so you can understand and discuss intelligently with the lending officers when the time comes.

4.    What is the typical size of a small business loan?

Small businesses come in many sizes, from a start-up of a one-person company to hundreds of employees, and their financial needs vary accordingly, so “typical” also varies. That said, in the banking industry the median small business loan is about $130,000- $140,000 with highest around $250,000. SBA small business loans range from about $5,000 (microloans) to $5 million (largest guaranteed) with the average loan around $371,000.

5.    How can you get financing to start a business since many banks want to fund growth?

Start-ups are probably the most difficult ventures when it comes to securing financing. Many start-up businesses seek financing from family, friends and credit cards.  If the credit is sound, the business plan strong and you have enough personal resources to invest and collateral to guarantee, smaller, community banks and  other community financial institutions and Credit Unions may consider lending you money.

Your best bet by far is SBA assistance. Begin by visiting SBA’s website. where you will find a wealth of information not only on how to secure a small business loan but equally importantly, other services and training opportunities to help you succeed.

6.    Are there associations that can help?

SBA works closely with a large network of partners that leverage SBA resources and are just one phone call away and ready to provide extensive help.

  • SBA District/Branch Offices – at least one in every state
  • SCORE – (approximately 300 chapters nationwide)
  • SBDCs – Small Business Development Centers; (approximately 900 locations nationwide; associated with higher education institutions (colleges and universities)
  • WBCs – Women’s Business Centers (approximately 100 educational centers nationwide)