The Small Business Administration (SBA) exists to promote small businesses in the United States by backing bank loans and offering numerous other benefits. If you’re looking for financing to launch your new business, an SBA loan can be a great place to start. These loans often have lower interest rates and more generous repayment terms than a loan you could obtain from a bank, credit union, or alternative lender. Knowing how to prepare to apply for an SBA loan can make the process much easier and faster.
Requirements Necessary to Apply for an SBA Loan
The SBA loan asks all applicants to gather the same documents when preparing for a loan. These include:
- Two to three years of business tax returns. If you’re starting a new business or if the SBA simply needs more financial information to evaluate your creditworthiness, you may need to supply your personal tax returns as well.
- Year-to-date and prior year financial statements.
- A credit score of at least 680.
- Building a lease if you’re applying for financing to obtain a physical location for your business.
These are the minimum requirements you can expect to produce when applying for an SBA loan. Because it backs 75 to 90 percent of each loan it approves, the SBA is extremely thorough in vetting its applicants. Even so, the process of applying for a business loan through the SBA is typically much shorter than it is through a bank. While the former averages 30 to 45 days from submitting an application to approval, banks can take 90 to 120 days to complete the same process.
SBA Loan Approval Can Be Difficult to Obtain
Not everyone who applies for a business funding loan through the SBA will receive the money they need. If you don’t meet SBA qualifications, it’s nice to know that alternative lenders like Avery James exist. We invite you to contact us today to learn more about our many small business financing options.