How to Get a Small Business Loan in 5 Easy Steps

Looking to expand your small business with a low-interest, long-term SBA loan? Check out these 5 simple steps to prepare you for the application and approval process.

Questions? Call us! 866-283-8726

Step 1: Decide Your Use of Funds

Before you begin working on your SBA loan application, decide how you will use the funds. This will help you stay on track when considering different loans. Are you planning to expand your business with a commercial real estate purchase, refinancing existing debt like cash advances or lines of credit, or for working capital (such as marketing, hiring, and inventory upgrades)? Draft a breakdown of your financing plan so that we can help you achieve your specific goals.

Step 2: Determine the type of loan and amount that works best for you

Depending on your business, you can consider various funding options. For new businesses and startups in operation for under 1-2 years, some possibilities include business credit cards, lines of credit, alternative loans, merchant cash advances (MCAs), SBA microloans, and personal loans. These may come with higher interest rates and shorter terms than options like SBA and traditional bank loans. These higher cost funds can take a toll on overall credit and cash flow. Ensure your business has strong cash flow and good credit so you can access to better funding options. Be sure to weigh the pros and cons of convenience.

Once you demonstrate sufficient cash flow and solid credit, you’ll be eligible to work with more affordable and less risky resources. SmartBiz Loans provides SBA 7(a) loans for businesses seeking secure, government-backed funding with long terms and low interest rates. Use our loan calculator to determine exactly how much the loan will cost. You’ll find specific interest rates, fees, and monthly payments associated with the amount you need. These metrics can help you decide the loan amount that works best within your business budget.

Step 3: Check requirements and eligibility

Once you’ve decided on your choice of financing, make sure to confirm that you’re on track in terms of eligibility so that you don’t run into issues down the line. Common factors that lenders look for include credit score, cash flow, and revenue trends.

Interested in SBA Loans? SmartBiz is the #1 online marketplace for SBA small business loans. SmartBiz streamlines the online application process, packages documents, and refers you to the bank partner that’s most likely to approve your unique application. Specialists are also available by phone and online to walk you through the process and answer any questions you may have. To ensure you’re on track to achieve your small business goals, keep these basic eligibility checklists in mind.

 

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To be eligible for an SBA 7(a) loan through SmartBiz of up to $350,000:

  • Time in business must be at least 2 years
  • Business owners must be U.S. citizens or legal permanent residents
  • Business owners must have personal credit scores above 650
  • Business and personal cash flow must be sufficient to service all debt payments demonstrated by tax returns and interim financial data
  • Public Records: No bankruptcies or foreclosures in the past 3 years; no outstanding collections; no open tax liens
  • SBA Specific Requirements: no delinquencies and/or default on government loans

To be eligible for an SBA 7(a) commercial real estate loan through SmartBiz above $500,000:

  • The real estate must be majority owner-occupied. This means at least 51% of the square footage of the property you’re buying or refinancing must be occupied by and used by your business.
  • Time in business must be at least 2 years
  • Business owners must be U.S. citizens or legal permanent residents
  • Business owners must have personal credit scores above 660
  • Business and personal cash flow must be sufficient to service all debt payments demonstrated by tax returns and interim financial data
  • Public Records: No bankruptcies or foreclosures in the past 3 years; no outstanding collections; no open tax liens
  • SBA Specific Requirements: no delinquencies and/or default on government loans
  • The rent replacement option requires a loan payment that does not exceed the current monthly lease expense

Find out where your business stands before you apply for an SBA or bank loan by getting started with SmartBiz Advisor™. Advisor is an educational online tool that helps you learn whether your business is loan ready and recommends ways to increase your likelihood of approval. This free, AI-based tool acts like a large-company CFO that reveals key criteria SmartBiz bank partners use to evaluate your business and provides you with personalized insights to strengthen your lending profile.

Step 4: Gather paperwork and relevant documentation

Once you’re ready to apply for an SBA 7(a) loan, the best strategy is to begin preparing so that the process is as easy as possible. Some of the documents that are most often requested by the lenders in the SmartBiz marketplace are:

  • Personal & business tax returns from the previous 3 years
  • Personal financial statements from each individual owning 20% or more of the company
  • Profit and Loss Statement
  • Balance Sheet
  • Collateral Documents

Other documents may be required to complete the SBA loan application package depending on your individual business story. Make sure you’re prepared to answer questions about your company and provide relevant paperwork as necessary.

Step 5: Apply!

Now that you’re prepared to apply for secure funding, the only task that remains is to apply. Each lender has different processes, whether online or in person, depending on the specific product. With SmartBIz, you can pre-qualify in under 5 minutes and connect with a Loan Specialist who can answer any questions and assist you every step of the way to ensure the process is transparent, clear, and easy to follow.

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