Apply For An SBA Loan

How do you apply for an SBA loan?  It’s recommended that you do a phone interview first, than assuming you think there is a fit, provide the required information to the SBA bank or lender.

As far as the interview, you want to accomplish a copy of things.  Number one is to be completely upfront and honest with the loan officer.  Tell them the strengths of the request and it’s weaknesses.  Do not try to cover anything up that you may perceive as a weakness, as the underwriters will find out. Underwrites are basically professional detectives and will scrutinize every detail of the file.  If there are issues, you should try to determine if they can figure out a solution now, before you put months into the process only to get a decline. 

Some examples of common issues include, declining business trends, credit score issues, high loan to value, low liquidity, start ups or “young businesses” (less than two years), etc.  This is not to say you should be passive.  You should have arguments thought out and prepared.  For example, say your last tax returns shows that your gross sales declined by 10% compared to the previous years.  You should say something like “our gross declined in 2008 however, are year to date is back on track.  We believe we have turned the situation around.  This is due to our new marketing plans and an increase focus on …” 

You should have other strengths to point out where applicable, “in addition, despite the declining trends we feel the cash position of our business and our relatively low loan to value, should help you get over these issues.”  The banker on the phone will be impressed and will more likely be willing to work will you.

Also, try to figure out what the proposed terms would be, assuming the bank thinks you are credit worthy.  They should be able to give you an idea of the loan to value restraints, approximate interest rate and amortization schedules.  Most SBA bankers will hesitant to give you any hard quotes or specifics until they have a real comprehensive understanding of the loan but, they should be able to give you an idea.  If you feel you can do a lot better, than move on. 

Apply For an SBA Loan

When you believe you have found and decent match you will now have to roll up your sleeves, and provide the required documentation.  The list is thorough and comprehensive.  Keep in mind there is no getting out of this.  You play ball, or have no chance of getting a loan.  At a minimum you have to provide, resumes, 3 years of business tax returns, 3 years of personal tax returns, personal financial statements, and year to date profit & loss and balance sheet. 

They will be other required items, but the banker can at least give you a real quote and or a term sheet which will spell out the terms of the proposed loan after they review these items.