Maybe you have a great idea and you want to turn it into a business. Or, perhaps you already have a business and are now looking to expand.
Either way, you know money doesn’t grow on trees… momma didn’t raise no fool.
So you head off to the bank with a skip in your step and a heart filled with hope because you’re about to get a loan that’ll make all your dreams come true… right?
You didn’t qualify. Damn the requirements. Damn the lenders. Damn all the people who took your hope and ate it for breakfast like it was some kind of cereal for dream killers.
Granted, you’re entitled to a little disappointment – maybe even a little anger.
But before you go getting all ‘I’m-never-gonna-be-an-entrepreneur’ depressed on us, we’re here to tell you that your dream isn’t dead.
In fact, there are a number of loans available from the U.S. Small Business Administration (SBA) that can get your business up and running in no time at all. Lets go through these expert tips on various small business administration loans before you decide what’s best for your business.
Start or Expand Your Business with These SBA Loans
Check out four Small Business Administration loans below to see if one would be a good fit for you – and be sure to read our tips for making the approval process as easy (and successful) for you as possible.
- Basic 7(a) Loan Program — Gives 7(a) loans to eligible borrowers for starting, acquiring and expanding a small business. This type of loan is the most basic and the most used within SBA’s business loan programs. Borrowers must apply through a participating lender institution.
- Certified Development Company (CDC) 504 Loan Program — Provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.
- Microloan Program — Offers very small loans to start-up, newly established or growing small business concerns. SBA makes funds available to nonprofit community based lenders which, in turn, make loans to eligible borrowers in amounts up to a maximum of $50,000. Applications are submitted to the local intermediary and all credit decisions are made on the local level.
- Patriot Express Pilot Loan Initiative — Provides financial assistance for veterans and members of the military community who want to establish or expand small businesses.
Get Approved with These Tips
Everyone (including momma) knows the old saying, “If at first you don’t succeed, try, try again,” right? If a traditional bank loan didn’t work out for you, there’s no reason to throw in the towel.
Thankfully, you can still apply for any of the above Small Business Administration loans… but, you’re still going to have to get approved through a bank or another lender.
Don’t worry, though, we have compiled some expert tips for you below that’ll help you secure the loan you need to start or grow your small business this year.
- Come up with a strong repayment plan. BizJournal quoted Grady Hedgespeth, the SBA’s director of financial assistance, as saying, “The number 1 reason we have for declining a loan is the lack of a repayment plan. We refer to them as the ‘wish and a dream applicants.’ That means if you don’t have a background in business and no resources, we aren’t going to guarantee the loan.” Hedgespeth went on to say, “And the stronger the plan, the better. We want to see what your cash flow is. And you would be surprised by how many people can’t say how much money they have in the bank.”
- Try a credit union instead. According to BizJournals, Marilyn D. Landis, a board member of the National Small Business Association says credit unions are more likely to approve loans than traditional banks – but you have to find ones that accept SBA loans. You can find out what credit unions and agencies the SBA deals with in your area by contacting the SBA’s district office in your region.
- Know that collateral isn’t an option; it’s a necessity. Marilyn advises, “You are going to need to put down between 10-15% of the loan and that can’t be borrowed money. You have to show that it’s coming from your pocket. Most banks will look for real estate as collateral, but the SBA will accept contracts or orders as collateral.”
- Little white lies turn into big fat “nos.” Both Marilyn and Grady agree: Lying on your application will get you nowhere. Says Marilyn, “I dealt with one man and everything was fine, until we came to the point where it asked if he had ever been arrested or convicted of a crime. He turned pale and said he had done something stupid when he was in school and that his father had always said it would come back to haunt him. It turned out it was fine. But if he had said no, and they found out about it while checking the application, then it would be fraud. And no loan.”