If a business owner does not have the money to invest into a new business, the obvious choice is to consider a business loan. While it’s true that nearly all loans have the same basis: the borrower gets a lump sum of cash and must pay it back over a specified period of time; loan programs are not all created equally. Out of all of the loan programs available, the one that business owners reach for the most is SBA loans.
However, there are some qualifications that must be in place before you can be eligible to receive this type of funding for your business. We will explore those in this article.
Basic Requirements for Business
The SBA does not loan out money itself, but works with lenders to disburse funds by setting up guidelines through community development organizations. These are “deal breakers”, so you must be sure that your business meets these guidelines to even be considered for an SBA loan.
Must be for-profit
Must be in the USA
Must be “small”
Additionally, the founders of the business must have invest both money and time, gone through all other lending options, and proven that they will be able to re-pay the loan within a specified period.
Iron Out Your Credit
Just like with other loans, your credit score and history will be used to determine whether or not you can be counted on the pay back the loan.
Go through the Checklist
There is so much more to applying for a loan than asking for it. There is an extensive loan application that must be filled out and much more.
Put Up Collateral
Typically, the business owner much offer some collateral in order to secure a loan. This can be real estate, equipment, accounts receivable, and more.
If you do end up getting an SBA loan, there’s not much limit to what you can use it for but this does depend on the terms of the loan itself. If you need help navigating the waters of SBA loans, call Hornet Capital Solutions.