Home Based 411 » Money & Financing

How to Get a SBA Loan

The Top Five Ways to Cash in on the Small Business Administration Loan Program

The United States Small Business Administration (SBA) offers a number of loan options to assist both existing and start-up businesses. By visiting the Financing section of their website, you'll gain important insight into the differences between the various loans.

From basic 7(a) Loans administered through commercial lending institutions that have a ten to twenty-five year maturity, to Micro-Loans managed by non-profit community "intermediaries" that have a maximum repayment term of six years, there's a loan program to meet almost every entrepreneur's needs. The SBA is also well known for the financial assistance that it provides to select groups such as minorities, veterans, and low-income or disabled individuals.

How though do you go about qualifying for such invaluable loans? Following are what we consider the top five tips to keep in mind when pursuing an SBA loan.

1. Attend any workshops or classes that the SBA provides or that focus on dealing with the SBA - What better way is there to gain insight on the SBA application process than to be presented with detailed information? While you'll potentially be meeting individually with a SBA counselor and/or SBA representative (e.g., a bank-employee), there's no such thing as having "too much information" when it comes to SBA loan application procedures.
2. Present a detailed loan proposal that includes a quality business plan - Don't even consider applying for a SBA loan until you have a top-notch business plan prepared. Your loan package should also include a concise summary detailing who you are, why you need the loan, and how you plan to repay it.
3. Provide current financial documentation if you're an existing business - If you have the financial data to support your claim that you're already a successful business owner that's worth the risk the SBA will be assuming by granting you your loan request, by all means, attach it to your application. If your current numbers aren't as "healthy" as you'd like them to be, don't resort to using "creative accounting" to make them look better. It's in your best interest to be honest and upfront with your financial picture instead of having the review committee suspicious of the documentation that you've provided.
4. Sell yourself to the SBA - You're not only selling your business idea to the SBA; you're also trying to promote your own skills and abilities as they pertain to your business pursuits. Attach a well-crafted resume, letters of recommendation, and other items that will help in conveying the characteristics that you believe are necessary to fulfill the obligations of the loan, as well as to make your business dream a reality.
5. Use SBA forms to complete your application - While you can create your own forms to convey your financial status, business projections, etc, the SBA has a webpage of free downloadable forms, letters, and guides. From the "Application for Business Loan" to a "Cash Flow Statement" and a "Check List of Required Papers to be Obtained from Applicants SBA/Bank Financing," the SBA has actually made it easy for you to know and understand just what information that it's interested in reviewing. Why re-invent the wheel when the SBA has already done a majority of the work for you? Feel free to provide any additional information that you believe is relevant to your application but that isn't listed on the checklist of required items.

By following these suggestions, you'll likely increase your chances of acquiring a loan. Regardless if you seek and/or obtain a loan through the Small Business Administration, this federal agency is a treasure trove of information and resources. Include the SBA in your support network as there truly are multiple ways of cashing in on the benefits offered by this far-reaching association.

Good luck finding the perfect home business opportunity!

PS - We'd like to hear from you!
Got a suggestion for a story, article, or hot trend? Do you have questions about buying a home business, or about this website? Let us know. john@homebased411.com