By: Gray Poehler,
QUESTION: I hear the Small Business Administration (SBA) is making loans again. What is the process to obtain a business loan?
ANSWER: To begin, you should understand that the SBA does not make loans; they guarantee loans made by participating banks. The SBA may guarantee repayment up to 85% of the loan amount, depending on the size and purpose of the loan. These guarantees enable banks to consider “qualified” applicants that otherwise may not meet their conventional underwriting criteria.
While qualifying for an SBA backed loan may be easier than a traditional bank loan, it is by no means a walk in the park. You should not expect to obtain 100% financing. Normally your must have up to 25% of your own money invested in the venture. While not a hard-fast requirement, you will be asked to pledge any available collateral, like your home or other investments. You will also be expected to sign a personal loan guarantee.
To obtain a list of both large and regional banks who consider SBA backed loans, go to their website http://www.sba.gov/about-offices-content/2/3109 and enter your zip code. Each bank has it’s own criteria to consider you for a loan, so check around and start with a bank with whom you already have a relationship.
Also check out the new website that SCORE Naples helped initiate http://www.gotsba.biz. This will give you a head start toward connection with a local bank that does SBA-backed loans.
The application process can be rather intimidating, so do yourself a favor and first check out the SBA site http://www.sba.gov/content/how-apply-sba-loan. This will give you an overview of what is considered and the necessary documentation required by SBA and it’s participating banks.
The SBA site cautions “While the standards for SBA-qualifying loans are more flexible than those for other types of loans, lenders still require extensive documentation to evaluate your loan request. You should strive to make the best possible presentation in your initial loan submission, since you may not get a second opportunity.”
The volunteers with the Naples chapter of SCORE can assist you in the application process and help you develop and assess the viability of your business plan.
To learn more about management issues facing your small business, contact SCORE Naples. Counseling is provided FREE of charge to all U.S. citizens and legal aliens. To register call 239-430-0081 or visit our web site http://naples.score.org/
SCORE Naples, in cooperation with the Greater Naples Chamber of Commerce, will present a workshop titled “Market To Your Customer Base,” June 1 from 6 - 8:30 PM, at the chamber office, located 2390 Tamiami Trail. To register go to http://tinyurl.com/3v56sb2 or call 239-430-0081.
If you would like an answer to your question, please fill out the form located at http://naples.score.org/mentors . A counselor will contact you within 48 hours. Please include your name, email address and a contact phone number.