PLG Capital Funding Group LLC is dedicated to bringing our clients benefits anyway we can including bringing you tips from industry professionals to help your business or personal finances. Part of this weeks financial insight is brought to you from Natale Goriel who is an SBA.gov official, please click below to read full article.
Money is the lifeline of any business, so whether you’re starting a business or running an existing one, securing financing is a major factor, especially for small businesses. Many budding entrepreneurs find the task daunting and don’t even know where to begin.
Here’s a simple yet practical guide on how to go about preparing to apply for a small business loan.
1. What criteria do banks look for in making small business loans?
Different banks or lending institutions may have different standards, but in general, in order to consider your application for a small business loan, banks will require:
- The loan must be for a sound business purpose. For SBA-guaranteed loans, the business must be eligible based on size, use of loan proceeds and the nature of the business (no lending, speculating, passive investment, pyramid sales, gambling, etc.)
- You and your partner(s) are of good character, have experience and good personal and/or business credit history
- Ability to pay back the loan- reasonable to strong collateral (personal and business assets) is very important. SBA expects the loan to be fully secured, but we will not decline a request to guaranty a loan if the only unfavorable factor is insufficient collateral. And of course, owners must have personal equity investment in the business/skin in the game.
2. What information will you need?
Different lenders may require more or fewer documents, but in general, you will need:
- Personal and business credit history
- Personal and business financial statements for existing and startup businesses and as well as a projected financial statements
- Strong, detailed business plan (including personal information such as bios, education, etc.)
- Cash flow projections for at least a year, and
- Personal guaranties from all principal owners of the business
Click to read full article: https://www.sba.gov/blogs/6-step-guide-how-get-business-loan