If you are planning to start your own small business, but dont have the financial capacity to do so, you could apply for a SBA (Small Business Administration) loan. However, before filling up the form and submitting the necessary documents, you should first determine if you would qualify for the SBA loan.
The main qualification of an SBA loan application is for borrowers to demonstrate their capability to repay the loan. As such, anyone who plans to borrow an SBA loan needs to state if his or her business sustains a positive cash flow, which could allow him or her to repay the debt on time. Other factors used in loan approval are the borrowers character and management skills, financial history, amount of equity in the business and other collateral. In addition, if the borrower owns more than 20% of the business, he or she must guarantee the loan being made. When this is the case, the lender would review the borrowers income history, credit report and FICO scores.
Once you feel that your credentials can pass for an SBA loan, look for local lenders that offer loans from the Small Business Administration. If you have no idea whether your city has an SBA lender or not, go online and check the SBA website. You can also ask your bank if they offer SBA loans. If you have found a lender, obtain a loan application form. Before filling up the form, make sure to read the instructions carefully and make a list of the steps needed to complete the application.
Compile all the business documents and financial reports needed for the application. Generally, the required documents needed for an SBA loan include your personal financial statements, latest personal and business tax returns, owners capital report, personal and business credit report, the companys Articles of Incorporation, cash flow projections, profit and loss reports, balance sheet, office lease documents, records of business debt and other documents required by the lender. After creating a loan proposal, you can now compile the form, supporting documents and your proposal, submit everything to the lender and follow instructions the lender would provide.