How to Get an SBA Loan: A 6-Step System for Success

Written by Dave Lavinsky

SBA loans offer a very attractive medium to raise capital for your business. They provide competitive interest rates to businesses that would otherwise not qualify for affordable loans. Here is a quick step by step action plan that will guide you in securing a loan from the SBA.

Step One: Invest your own equity

Banks need to see that you are invested in your business not only with your time and hard work, but financially as well. This ties you even closer to your venture, as you now have a stake in its success. If you’re at the loan seeking stage then you have probably already done this in one form or another.

Step Two: Assess your needs

One of the most important things that we are taught is to write out our goals in order to achieve them. The same principle applies to entrepreneurs applying for a loan.

It is important for you to assess the current state of your business. What are the key areas that require funding, and how much do you need? Why do you need that much? Could you do with less, and what type of impact would that have on your company? These are all critical questions that you should have answered before applying for a loan.

Furthermore, have your future goals written out as well. Know which milestones your business must achieve in order to be a success. The same questions apply here regarding the funding you need to achieve those milestones.

Step Three: Prepare the necessary documents

There are a series of documents that you should have on hand before applying for a loan. These documents show the lender that you are prepared, have thought through your business concept and also showcase your qualifications.

The most important document, especially for early-stage businesses, is a concrete business plan. Having a properly structured and detailed business plan, including financial projections, is mission-critical to getting funded. In fact, a business plan is of such importance that many entrepreneurs seek out outside consultants or industry experts to help write their business plans.

In addition, you need to create a document that briefly but carefully explains how much funding you need, and any collateral that you will be willing to place as backing to the loan.

Also have your business and personal financial statements ready. Your business’ financial statements should consist of your last three years’ operating history. If you’re business is new, make sure to have detailed financial projections that are realistic and attainable. Your personal financial statements will also be requested, primarily for background and a credit history checks.

Step Four: Prepare to make the deal

Preparation is key, you can never be over-prepared. Mentally, you should be approaching this as you would a job interview. Review your business concept, your business plan, and be an expert with your financial model.

To further leverage your position you should look to acquire additional documentation. These documents can consist of anything that will make you and your business more credible, showing that you have some “traction” and are heading into the right direction. Letters from strategic partners, suppliers, marketing firms, interested buyers, lawyers or otherwise are all helpful.

Step Five: Find the right bank and close the deal

Next, you need to identify the right lender that fits your needs. There are over 22,500 SBA lenders, meaning that there will most likely be one in your local community. The difference between these lenders is their level of certification with the SBA. Some SBA lenders have a turnaround time of 2 days, while others can take multiple weeks. If you’re short on time, seek out SBA Preferred or Certified lenders.

Step Six: Grow your business

Now that you’ve got your funding, its time to get to work!

Remember to put your raised capital to use right away, as you don’t want to be paying interest on unused cash.


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