Intuit’s research is based on interviews with small business owners seeking credit and the banks and lenders who can provide it. And, while they note that credit will remain tight, they suggest that businesses ‘…that can demonstrate the ability to manage assets and cash flow will find credit is still available, although not unlimited.’
Combine this research with the steady flow of new and revised loan programs that have come out of the Small Business Administration (SBA), and it could just be the right time for many small business owners to seek funding from the credit markets once more.
But knowing how to position yourself as an attractive and viable investment for banks and lenders is going to require a lot more planning and preparation than was required in the days when banks were a lot more ‘credit happy’.
If you are seeking a business loan, whether a traditional loan or one backed by the SBA, here are some tips to help you position yourself as a fiscally responsible candidate.
1. Research Potential Lending Institutions
To stand the best chance of succeeding with your loan application it will help to approach a bank that is familiar with your industry and target market. Your local Chamber of Commerce, Small Business Development Center in Mohave County, or other business networking group should be able to point you in the right direction. You may also benefit from approaching smaller community banks like Horizon Community Bank, as opposed to the larger national banks. Community banks can often put a face to the application process, and, since they typically operate in the same community as your business, there is a good chance that they will have prior knowledge of your business. Your time may be well spent shopping for a lender that participates in SBA-guaranteed loan programs, an excellent source of funding for small businesses in these economic times.
DID YOU KNOW??
HORIZON COMMUNITY BANK WAS RANKED AS THE
#1 ARIZONA-BASED SBA LENDER IN 2012 AND 2013!
SBA loans cover a wide variety of business needs including start-up costs, business expansion, supplies and machinery. More established businesses can benefit from traditional loans not backed by the SBA, but do consider that the government is offering up significant risk-reduction incentives for banks to opt for SBA-backed loans. These types of loans increase the amount of capital available to small businesses and local communities from lenders.
2. Gather all your Documentation
Before you start applying for loans, you should gather some basic documentation about you and your business – such as a demonstrably good income record. This Business Loan Checklist from Business.gov includes some of the typical items you will need for any small business loan application.
3. Prepare Your Loan Application
Most banking institutions will have separate loan application processes, but if you are pursuing an application for an SBA loan, there are specific types of information that you’ll need to provide. And remember, you must work through your bank for an SBA loan. The SBA itself doesn’t provide direct loans; your lender will submit your loan package to the SBA for approval.
A SBA Loan Application Checklist from SBA.gov will help you understand the loan application process and what forms you will need. You can also read this post – How to Prepare Your Loan Application – for quick tips and advice.
DID YOU KNOW??
HORIZON COMMUNITY BANK WAS RECENTLY AWARED ARIZONA’S
SBA FINANCIAL SERVICES CHAMPION FOR 2013!
4. Prepare for Your Loan Application Interview
Whatever your motives for needing a business loan, present a positive and professional demeanor at the interview. Be prepared for a variety of questions and make sure you can back up all your loan application claims with facts.
You are selling yourself, your confidence in your business plan, as well as your ability to make good on your loan. Communicate clearly how much money you need, what you intend to use it for and exactly where the business loan will be allocated (premises versus equipment versus staff, and so on). Prepare your repayment plan and be sure to include it in your documentation.
5. Get Expert Advice
It costs nothing to talk to your local SBA office or local Small Business Development Center (SBDC). Each has experts on hand to help you navigate the loan approval process; it’s also likely that they will have their fingers on the pulse as to which strategies work well in recessionary times.
Many SBDCs also offer up free resources including small business events and seminars as well as books and publications on an array of business subjects. Some even offer computer workstations that you can use to conduct market research, create business plans, evaluate your company’s financial statements, and more.
The decision to pursue an SBA credit application is not necessarily an easy one. There are many fac¬tors to consider, including which programs to pur¬sue, eligibility, fees, loan limits, collateral and other fundamental issues. An SBA loan could be beneficial to your business but being well-informed about the SBA process will make you a much more qualified borrower in the eyes of your lender. In these times of tougher credit, you may find that an SBA loan could make the difference between life and death for your business. To find out if an SBA loan is the answer to your business financing needs, speak with your local Horizon Community Bank SBA Department at 928-854-3000.