1) Do you have sufficient cash flow?
SBA lenders want to be confident that you have sufficient dollars to make your loan payments and they’ll determine your ability to repay from the business owners’ and the business’s cash flow. It’s important that the income you generate, or project you will generate, is more than your current debt payments so that you can show the lender you can afford to take on additional debt.
2) Are you willing to put up collateral?
Most SBA lenders require loans be fully collateralized if borrowing over $350,000. Smaller loans may only require a lien on fixed business assets. SBA loans $25,000 and less typically do not require any collateral. Be sure to ask your SBA lender about their specific collateral requirements.
3) Is your use of loan proceeds acceptable?
The way you are going to use your loan proceeds matters. For example, there are SBA lenders that require you borrow a certain amount if you’re looking to acquire a business or purchase real estate. Different SBA lenders have different requirements. You’ll save yourself a lot of energy if you understand these requirements up front.
4) Can you afford the monthly payments?
SBA loans are popular because they typically have some of the lowest monthly payments of loan options. If you can’t afford the monthly payments, consider if a smaller loan amount will still enable you to grow your business. It’s best to apply for the amount of funds you can afford and that serves your business needs.
5) Can the SBA lenders meet your timing?
You might need funds faster than most SBA loans and lenders can provide. Most SBA lenders can take months to process your application. Luckily, small businesses have some new options to get an SBA loan quickly. Online SBA lenders, like SmartBiz, (smartbizloans.com), use advanced technology platforms to automate the SBA application process, shortening the approval process to as fast as 7 days.