Whether you're a new start-up or established business, finding a small business loan to fund your business can seem overwhelming. According to the Small Business Administration (SBA), the federal government backs SBA loan programs to create opportunities for business owners. These programs are offered by financial institutions, which evaluate your personal credit history, education and experience to approve the loan.
Prepare the Right Documentation
When launching a new business, financial institutions want to see that you understand the current market. Prepare a business plan and include an in-depth analysis of the current marketplace, and how your business will address consumer needs. In the business plan, you'll need to show income, cash flow and debt projections. This will allow the financial institution to better understand your company's potential.
Small Business Administration Loans
According to the SBA, financial institutions offer loan programs that are guaranteed by the SBA. This allows banks to offer small business loans with less risk (the SBA guarantee these loans). These programs are called "7 (a) loans." The types of 7 (a) loans available include the Express program, Export Loan program, Rural Lender Advantage program and Special Purpose Loan programs.
SBA 7 (a) Business Loan Details
The SBA Express loan program offers loan approval within 36 hours. Before applying for this loan, you'll want to make sure to have the required financial information gathered (call the bank ahead of time to get a list of what you need). This will make the approval process much easier.
The SBA also offers an Export Loan program. This program targets companies in the business of exporting. These programs are focused on helping export start-ups and existing companies expand their export activities.
The Rural Lender Advantage program was created to help businesses in rural communities. These programs provide economic opportunities in small communities suffering population loss and high unemployment rates.
Special Purpose loan programs are offered to help businesses that have suffered financial issues because of North American Free Trade Agreement (NAFTA). These loans provide opportunities to offer employee stock ownership plans and improve (and implement) pollution control devises.
