Steps that Lead to an SBA Loan

By Kraig Kliber, Business Banking Leader

Through the events of the last several months, small businesses have seen community banks and the SBA step up to serve their needs. As a business owner, you have goals for recovery and growth. Providing guidance and assistance to accomplish those goals is what I’m here for, and a partnership with a community banker and the SBA could be your next step.

To serve the needs of small business owners, there is one primary SBA loan program that Preferred Lenders, like Village Bank, frequently use—the SBA 7a program. Additionally, through the use of lending partners, called Certified Development Companies, we also frequently utilize the SBA 504 loan program. These loan programs can provide financing for almost any business banking need you have from fixed assets to working capital needs.

For startup businesses, some of the typical indicators that an SBA 7a loan could be a good option include:

  • Your business has inadequate collateral value or lack of collateral
  • You’re starting from the beginning and need funding to support your progress
  • Conventional financing equity and collateral requirements don’t match your situation
  • You want to retain complete ownership of your startup, so you’re not in favor of investor funding
  • You can’t or don’t want to ask friends and family for more financial support

    

If any of these describe your startup situation, here are the steps you can take toward an SBA solution:

  • Contact a community banker (ideally a Preferred SBA lender) to start the conversation. They will be able to provide you with helpful information to ensure that you’re looking at the best financing option for your business.
  • Calculate startup expenses to have a better idea of the funding you’ll be applying for. Common startup costs could include office space (leasehold improvements), equipment, utilities, licenses and permits, and marketing.
  • Prepare a formal financial report, business plan, and projections to provide your community banker with information to keep the process moving.

    

For existing businesses, some of the typical indicators that an SBA 7a or 504 loan could be a good option include:

  • You have a desire to limit project liquidity needs or have limited project liquidity
  • You would like to purchase the building you are currently operating in or purchase a new building to house your operations
  • The business is growing and you need to expand to accommodate for the growth
  • You have an opportunity to acquire another business
  • New equipment needs to be purchased
  • You need funding to get through expected slow periods for cyclical businesses

    

If any of these describe your situation, here are the steps you can take toward an SBA solution:

  • Contact your community banker, who should be an SBA Preferred Lender, to start the conversation and communicate the goals of your project. They will be able to explain the options available to determine what the best option is for your project.
  • Make a solid business case to your banker explaining your project goals and the need for more funding. By preparing a statement with the total requested amount and specific reasons for it, your banker can more easily make a determination and move the process along.
  • Prepare personal and business financial statements, tax returns, and a forecast. These will demonstrate how your business is doing financially and unlock potential options and opportunities to be unearthed by your banker.

     

Our Village looks forward to starting the conversation with you about the steps that will lead your business to obtain funding through the use of an SBA loan platform. Contact our SBA team of experts to take the next steps.

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