How to Take Out an SBA Loan How You Can Improve Your Credit Score Here ph
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The U.S. Small Business Administration (SBA), an independent agency of the federal government, is dedicated to helping protect and provide for the interests of small businesses throughout the country. As part of its mission to help businesses obtain the capital they need, the SBA works as a middleman to create meaningful relationships between businesses and lenders. Although the SBA does not loan money directly to business owners, the agency guarantees loans that are provided by its partners (participating lenders, community development organizations and microlending institutions), enabling you to receive a loan you may not have otherwise qualified for. Understanding How SBA Loan Programs Work To obtain an SBA-backed loan, you will work with a local financial institution, but follow the guidelines provided by the small business agency. In other words, “when a business applies for an SBA loan, it is actually applying for a commercial loan, structured according to SBA requirements with an SBA guaranty.”
Currently, “the SBA may not guarantee certain types of loans if your business can obtain funds on reasonable terms from a bank or other private source. This means you must first seek private financing. Your company must be independently owned and operated, not dominant in its field, and must meet certain standards of size in terms of employees or annual receipts. SBA loans cannot be made to speculative businesses, newspapers or businesses engaged in gambling. Applicants for loans must also agree to comply with the SBA regulation that there will be no discrimination in employment or services to the public based on race, color, religion, national origin, sex or marital status. Other specific loan guaranty requirements are subject to change as the federal government alters legislation regarding fiscal policy and priorities. Preparing to Apply for an SBA-Backed Loan The SBA provides a loan application checklist “to ensure you have everything the lender will ask for in order to complete your application. Once your loan package is complete, your lender will submit it to the SBA.” Included in what you should prepare before you approach a potential lender are the following items: “‘SBA Form 4: Application of Business Loan,” “SBA Form 912: Statement of Personal History” and “SBA Form 413: Personal Financial Statement.” You should also have copies of your company’s balance sheet, profit and loss statement and a one-year income and finances projection.
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Additionally, you should compile a list of all owners and affiliates detailing their contact information as well. You must provide proof of licensing as well as your loan application history. You will also be required to submit business and personal income tax returns, resumes of all principals, a business overview and history and a copy of your business lease. Sources: “SBA Loan Application Checklist,” SBA.gov. “Small Business Loans: SBA’s Role,” SBA.gov. “What SBA Offers to Help Small Businesses Grow,” SBA.gov. Comment below, and I'll send you a free gift.
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