Traditionally, SBA loans are designed for businesses that have at least a 2-year history of sales. Startups often struggle to get an SBA loan. Because of the risk of default, an SBA startup loan is harder to get. Still, there are ways that you can increase your chance of approval.
What Type of Loan Do You Need?
The SBA has many different types of startup loans, from microloans to the 504 loan program, which is mostly for owner-occupied real estate. Getting qualified for an SBA loan is easier when you know which loan program you’re approaching and how you plan to use the financing. If you have a large down payment of 25% or more, it might be easier to qualify.
Know the Requirements
SBA loan requirements are very strict. You will need exceptional personal credit, a down payment, collateral, and industry experience. Check with your lender to see how to meet their requirements. If you don’t have enough experience, you may be able to hire an operating partner to help you run the business. You cannot have any negative credit issues, such as bankruptcies or liens.
Put Together a Solid Business Plan
This is one of the times when you need a well-written business plan that goes into detail about your business. Back up your plan with data from the industry and your area. You will have to show the lender that your projections are well-founded and based on solid information.
Find the Right Lender
Work with an SBA lender who will work with startups. You may need to do some research because not all lenders will. It could take some time. You may need a plan B before you get an SBA loan as a startup.
Contact OneClick Commercial Funding for financing options, including SBA loans, for your business.
