Working capital is the lifeblood of any business, but traditional financing can be difficult for small business owners and entrepreneurs. SBA loan It was created to fill that gap. Contrary to popular belief, SBA loans are not just for startups and businesses that have been turned down for traditional loans. SBA loans have a variety of benefits, including more flexible lending terms, and may serve as a gateway to obtaining traditional financing in the future. This article explains what you need to know about SBA loans and how to apply for them.
Application requirements for small business loans
The core requirements of the 7(a) and 504 loan programs are: SBA’s SOP. To qualify for an SBA loan, applicants must meet these requirements throughout the application process, from application to loan closing and disbursement. Below is a list of key requirements.
- It must be an operating business organized for the purpose of profit.
- Based in the United States and primarily operates within the United States
- pay taxes to the US
- Use SBA loan funds to purchase only U.S.-made equipment and products (to the extent possible)
- You must demonstrate that you are unable to obtain a loan of the same amount on reasonable terms from a non-federal, non-state, or non-local government source.
In addition to these main requirements, you should also consider the following:
Collateral and personal guarantees
SBA loans must be guaranteed by at least one person or entity. A business owner who holds more than 20% of his shares in the applicant business must provide a full personal guarantee.
Owner credit score and financial history
As mentioned above, SBA loans often require a personal guarantee from the owner. As such, personal finances are intertwined with business finances. Businesses applying for SBA loans must submit personal financial statements for all individuals securing the loan.
You may also need to give the SBA lender permission to check your credit score and history. Upon request, you must also provide personal tax returns for the past three years.
Business plans and financial forecasts
Small businesses applying for SBA loans may want to: business plan (Required for startups) Information about your target market, competition, marketing strategy, and a clear understanding of how financing will be used to grow your business. If you don’t already have one, you can get free help creating a business plan through one of the SBAs. Small Business Development Center– Find your nearest store in Vermont or New Hampshire here.
You may also need to create financial projections for at least the next two years and file business tax returns for the past three years. Self-employed individuals can provide a Schedule C.
So what do SBA lenders look for in your business plan and financial documents?
- Strong and stable cash flow to cover debt
- demonstrated excellent management
insurance requirements
If applicable, you may need the following insurance policies:
- Hazard insurance on all assets pledged as security
- Marine insurance applicable to all ships
- flood insurance
- Life insurance for business owners
- Product liability insurance
- Drum Shop Host Liquor Liability Insurance
- disability insurance
- workers compensation
- medical malpractice insurance
Common mistakes to avoid when applying for a small business loan
When applying for an SBA loan, it’s important to take your time and make sure all the information you provide is correct. Providing incomplete or inaccurate information on your loan application may result in your loan being denied or delayed. Union Bank has been one of the SBA’s preferred financial institutions since 1987, so we can help you through the application process.
Another common mistake is not addressing potential obstacles. Business owners must address potential obstacles and provide an explanation on the loan application.
Documents required for applying for small business loans
If you’re wondering how to prepare your application for a small business loan, one of the best things you can do is to get your documents in order before you start applying. This will ensure that the process goes as smoothly and quickly as possible. Some of these were discussed in the previous section, but here is a helpful list for your convenience.
- Personal and business tax returns
- Financial statements and balance sheets
- Business plans and financial forecasts
- Government-issued photo ID and proof of business registration
- Articles of incorporation or organization
- Internal regulations and amendments
- partnership agreement
- Association rules
Application schedule for small business loans
SBA preferred lenders like Union Bank can expedite the application process. However, your small business loan application timeline will vary depending on the type of small business loan you apply for, the complexity of your business, and any supporting documentation. On average, SBA loans take approximately 45 to 75 days to close. The more prepared and organized you are before you start, the faster things will go. If you have questions about the schedule for your SBA loan, you can contact Union Bank’s business lending team at any time during the application process.
Small business loan process steps
Follow this step-by-step guide to applying for a small business loan to understand what to expect.
1) Complete your SBA loan application.
As mentioned above, it is very important that you fill out the application completely and accurately. Any errors or missing information will slow down the process.
2) Your application will be processed
We will contact you if we require any additional information or documentation to process your SBA application.
3) underwriting
At this stage of the process, we will review the information in your application, including your income, assets, debts, and other details about your business and personal finances.
Four) Closing and payment
Once the loan closes, you will be disbursed your funds and can work on growing and expanding your business.
Resources for small business owners in Vermont and New Hampshire
Union Bank is proud to be part of the premier resource network for small business owners in Vermont and New Hampshire. Although we offer a variety of financial products and services designed specifically for small and medium-sized businesses, we recognize that you may have other needs as well. That’s why we’d like to introduce you to some additional organizations that can help entrepreneurs succeed. By leveraging these resources, combined with Union Bank’s services, small business owners in the region can maximize their chances of success.
Apply for an SBA loan in Vermont or New Hampshire!
Don’t miss the opportunity to grow your small business. Use our article as a guide to start your loan application process with Union Bank today.at the location of vermont state and new hampshireour dedicated team is ready to provide you with tailored assistance and support your financial goals. Contact our commercial lending team Contact Union Bank to learn more about our SBA loan options. Looking for additional resources for small business owners? Check out our recent articles on . “NH Resources for Women-Owned Businesses.”
