However, the loan application process can be shortened substantially if you have all the appropriate paperwork in place so that a decision to made within one week’s time. As a start up business you will need to personally guarantee any debt financing from the SBA lending bank. The most popular loan program is the 7a SBA loan. Additionally, banks would see that you have an extensive amount of experience in the industry in which you are starting a business, acquire a business or expanding a business. Typically, an SBA lending bank wants to see that you have at least 2 to 3 years of specific experience within your industry or a highly related industry. The prospect of obtaining debt financing to be very difficult, but it does not have to be. There are several pages of information that you’re going to provide to your banker when you apply for an SBA loan.
That financing usually requires a provide a personal guarantee on the money you are seeking. It has been a boon to the economy that the SBA exists simply due to the fact that loans are able to provide very quickly. We strongly recommend that you take a look at your credit score from all three credit bureaus prior to applying for any type of debt. Typically, most conventional business loans cannot be used for startup funds and less they are secured completely against personal property that you already have. When it comes to approaching the SBA, you’re going to have a financial statement that is at least three years to five years in length. Having an asset liquidation plan is imperative when you are applying for any type of bank financing.
Debt financing is a very good way to launch your business because it does not require that you give up a share of your business to a third party. One of the best sources of information about varying SBA loan programs is the SBA website. This is primarily due to the fact that the risk associated with the business acquisition, via a SBA loan, are much less than those of having to start up a new business. In addition to the seven a SBA loan program, the SBA 504 program is also extremely popular. You’re going to always need to provide a complete personal guarantee for the loan when you applying for this type of financing.
The three C’s of lending, credit, collateral, and character will ensure that you are able to receive your loan with minimal hassle. Having an asset liquidation plan is imperative when you are applying for any type of bank financing. In many instances, lending banks often package their SBA loans into bundles so that the risks are reduced. Recently, the US government has made great strides to increase the SBA program so that small business owners can continue to receive credit despite the current economic difficulties.
It is key that you have an economically viable business model in place so that you can effectively showcase to your banker why glory good credit risk. Businesses that are popular candidates for SBA loans include real estate businesses, service businesses, medical businesses, as well as other companies that generate a high cash flow. A small local bank will be able to have a much better understanding of why your company will be successful in its local market.
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