SBA Loan Process

If you have a small business in search of competitive business financing, your options may be limited if you lack collateral. Even if your business has been doing well-and you've paid all your bills and turned a profit every month-it may not be enough to meet the collateral requirements of your local lender.

Like many business-owners up against this particular wall, you may look to the Small Business Administration (SBA) may be just the organization to get you out of a jam. If your successful established small business is ready to develop and you know just the direction to go, the SBA can help you get the funds you need, even if your collateral offering isn't that great. With the SBA there to guarantee up to 75% of the principle of your loan, that lender that turned down your application last month just might see his way clear to providing you with the small business financing you need.

So once you've decided to take the next step for your small business, how do you get started? What follows is a basic walkthrough of the SBA loan process.

• Contact your lender. Small business owners do not apply directly to the SBA for loan-backing approval, but instead use their local lender as an intermediary. Your lender will contact the SBA if your loan application and business plan are strong in many areas, but lacks adequate security for the lender.


• Find out if you're eligible. SBA loan applications from ineligible lenders will not be considered. Eligibility requirements vary depending on the type of loan you are applying for-generally speaking the SBA determines eligibility based on the size and track record of your business, as well as the availability of business financing from sources other than the SBA.

Your local financing professional can help you determine your eligibility, as well as which loan you qualify for. During this step of the SBA loan process, some groups-such as veterans, minorities, and women-enjoy special benefits. Women, for example, may be able to obtain pre-qualification through non-profit and other groups.

• Gather information. Once you've made sure you're eligible, it's time to prepare the application. A complete application requires a great deal of information. In addition to typical loan-application information such as details about your business' finances and credit, the SBA loan process takes into account factors such as your character and especially your plan for using the loan funds.

The more complete view of yourself and the next steps for your business you can give the SBA, the more likely it is that your application will be successful. Depending on your business you may need to supply documents such as leases, contracts, and relevant licenses and certifications.

• Submit your application. At this point in the SBA loan process, there is a great deal of variation depending on what type of loan you are applying for. The SBA Express loan-for instance-can be processed within thirty-six hours. The good news is that most eligible applications are approved.

This document provides a basic overview of the SBA loan process, but is not comprehensive. Most applicants will find the information-gathering portion of the SBA loan process to be the most time-consuming and technical. Your lender can help ensure that your application is complete.