The process for getting a loan from the Small Business Administration can take up to 12 weeks. Before starting the process, you must understand all of the steps involved. This will allow you to gain confidence and avoid making an error. According to Lantern by SoFi, “SBA loans cover several different loan programs offered by the Small Business Administration.”
Six Steps to Success in the SBA Loan Process
The complete lifecycle of the loan process is summarized in this article. By learning about the various steps involved, you can prepare for the start of your business and avoid unexpected obstacles.
1. Determine Your Project
Before starting the loan process, you must identify your goal and project. Knowing the necessary details about your business will help ensure that you’re approved for funding. Having a clear picture of your plan will help guide you through the rest of the process.
If you’re unsure which type of business you want to start, try pre-qualifying for a small business loan. This process can be done online in a couple of minutes. It will provide you with an estimate of how much financing you’re eligible for.
2. Calculate How Much Money You Need
Before applying for an SBA loan, you must know which type of business you want to start. This will allow you to determine how much money you need to fund. You can then create a financial projection that includes the start-up costs and other areas that you can save.
3. Find a Bank To Finance Your Loan
Although many banks provide services to the Small Business Administration, your bank might not be the best option. Instead, look for the agency’s list of Preferred Lenders. These banks have a track record of providing exceptional service to the small business community.
It’s important to talk to banks about their funding requirements for different types of businesses. For instance, some banks only provide loans to established companies, while others will help start-up businesses. Having multiple bank approvals can help increase your chances of getting approved. Ask each lender what their SBA loan interest rates are to determine the best deal available.
4. Complete the Loan Application
After you’ve identified a bank, a packaging service provider, and a lender that you’re interested in working with, it’s time to complete a loan package. Although the loan application details vary depending on the lender, the package should include all the necessary information to get approved. Some forms often included in the package are the bank application form, Form 1919, Form 413, and other forms to input your personal information.
After you’ve submitted the loan application, the next step is to go through the underwriting process, which involves analyzing the information contained in it and pulling your credit. The lender will determine if you’re a good fit for their loan program during this process.
After the underwriting process is complete, the next step is to close the loan. This process is all its own, and it adds another 90 days to the timeline of the loan process.
Applying for a small business loan can be time-consuming, especially when you’re working to establish a new business. The key to success is finding a lender that will meet your needs and stay organized throughout the entire process.