Monday, December 13, 2010

Loan Tips from Bloomberg Businessweek

Below is an article that was posted last week in the Today's Tip section of Bloomberg Businessweek. It gives great suggestions for obtaining an SBA loan but these tips can be applied to obtaining any type of financing!

Ways to Help Secure an SBA Loan
Posted by: Today's Tip Contributor on December 9, 2010

The Small Business Jobs Bill signed by President Obama in September offers good news for small business owners seeking Small Business Administration financing. The new law extends the SBA loan enhancements first allocated by the 2009 Reinvestment and Recovery Act, reducing fees for borrowers and raising government guarantees on SBA loans from 75 percent to 90 percent. The bill also waives the SBA guarantee fees typically paid by the borrower and increases the SBA loan maximum from $2 million to $5 million. So how do you take advantage of the new provisions? Here are some how-tos to help you obtain an SBA loan:

1. Know the requirements. You’ll need to provide personal and business tax returns for the past three years; an executive summary of your business; a personal financial statement including assets, liabilities, and details of personal income; and copies of your insurance policies.

2. Document debt. You’ll also have to provide documentation of current and outstanding business and personal debt.

3. Improve your credit score. All owners with at least a 20 percent equity stake in the business will need to demonstrate a strong personal credit history. These high-stakes owners also will have to be ready to guarantee the loan personally.

4. Get organized. In our experience, many small business owners aren’t prepared and don’t have all the necessary information and documents available. Making sure your application is complete will expedite the loan process.

5. Explore lender options. Both bank and nonbank lenders make SBA loans. You can find a complete list of SBA lenders on the agency’s website.

You should avoid having preconceived ideas about whether your loan will or won’t be approved. Every situation is different. You should keep in mind that each application is evaluated on an individual, case-by-case basis—including yours.

Barry Sloane
Chief Executive Officer
Newtek Business Services
New York

Click here to read the article.

2 comments:

  1. I still think that the banks need to be pushed harder to start lending to small businesses. I feel that banks are not willing to take any risks anymore.

    ReplyDelete
  2. Many lenders this days are having a long time of evaluation on the loan application requests because they want to be secured that's many consumers are resulting to rejected.

    ReplyDelete