Rachel Zippwald, a vice president for California Bank &Trust, has been working with SBA loans for 23 years. She says that a lot of banks offer the loans, but not so many offer advice on how to qualify for them. She notes that there are special incentives and some fee waivers right now, so now’s a good time to go after one. Here’s her advice on how to get one:
1. Provide details on exactly how much financing you need and how you will use it.
For example, if you’re seeking $125,000 to expand your business, explain to your lender how you will use the funds, such as you need $75,000 for working capital to support three months of expenses, and another $50,000 for seven networked computers and a server.
2. Provide information about company management.
When banks lend money, they like to understand who runs the company and to be familiar with their backgrounds.
Help your lender by providing a resume for each owner or key employee and describe their functions and responsibilities.
If certain key positions have not yet been filled, include a thorough job description of the type of person you are seeking.
3. Be prepared to offer collateral.
If you own a home, you will likely be asked to pledge it.
Most loans made by banks are secured loans, and therefore approval may be contingent on a guarantor who is willing to offer collateral.
4. Detail your credit history and credit score.
Your bank will eventually run its own credit report, but if you can provide information prior to them doing so, you can discuss any issues ahead of time.
5. Provide complete copies of tax returns, financial statements and bank statements.
One way to streamline the process is to scan your financial documents and provide them to your lender in the form of a disk or a flash drive.
6.Explain how you’ll achieve your projections.
If customers have expressed a desire to do business with you, give your lender a copy of their correspondence.
If the loan for which you are applying is intended for a new piece of equipment that will allow you to reduce your staff needs, describe how this will occur and show the math.
7.Expect questions and be patient.
Take the time to thoroughly explain the nature of your business, your vision and your background.
Feel free to request an estimated time frame for approval and respect that the projected date may slip a bit.
It’s best not to call or email your lender frequently – remember that in lending, no news is often good news.
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