SBA Business Loans – Being Prepared

Research and business are plan both done. You understand what mistakes to avoid. Now you have decided to apply for SBA business loans. This article will help you be prepared with the documentation you will need to submit an application to a lender. When entrepreneurs think about a loans for small business or a franchise…

Research and business are plan both done. You understand what mistakes to avoid. Now you have decided to apply for SBA business loans. This article will help you be prepared with the documentation you will need to submit an application to a lender.

When entrepreneurs think about a loans for small business or a franchise loan, they think SBA. During the meeting with a lender, the lender will ask for certain information before deciding to use an SBA loan program. Normally a business will need the following documentation to evaluate your loan request:

1. Business Overview.

A document describing who are the borrowers and who are the owners, type of business, annual sales, number of employees, length of time in business and ownership.

2. Loan Request.

A description of what you need financing for, how much money you need, how loan funds will be use, and how much you plan to put down (aka inject) into the deal if it is for a start up business. The loan request should also include purpose, amount and type of loan.

3.Collateral.

Many lenders require collateral of 50% to 100% of the loan amount. So you will need a description of the collateral offered to secure the loan; including equity in your real estate holdings, equity in the business, assets (self directed retirement accounts, stocks, bonds etc.) borrowed funds and available cash.

4. Business Financial Statements or Tax Returns.

If you are purchasing a business you will need to provide the business financials from the seller. If you own another business, you will also need to provide financial statements on all businesses owned. The financial statements or tax returns must be complete for the past three years and current interim financial statements.

5. Personal Financial Statements and Tax Returns.

You will need to provide tax returns and personal financial statements on all owners, partners, officers and stockholders owning 20% ​​or more of the business. Once again the statements must be complete and for the past three years with current interim.

6. Performa and Projections.

Cash flow projections indicating the next five years how much cash you expect to generate to repay the loan.

7. Credit Report.

Typically lenders prefer a minimum 660 credit score or higher with good credit history.

The strength and accuracy of your financial statements will be the primary basis for the lending decision, so be sure that yours are carefully prepared and up-to-date.