How to Apply for an SBA Loan Like a Boss
While the Small Business Administration (SBA) annually qualifies thousands of loans for small businesses, applying for an SBA loan can still seem daunting. Simply meeting the qualifications for a loan doesn’t always mean you’ll receive one.
According to the Bureau of Labor Statistics (BLS), approximately 80% of businesses will see their two-year anniversary, but only 25% will survive 15 years or more. Financial institutions that offer SBA loans want assurance up front that both the business and its owners are a good risk.
The good news? Financial institutions are on your side. “Small businesses are the cornerstone of the U.S. economy, and loans often make the difference between getting the capital needed to take the next step and closing the doors,” says Dave Christiansen, director of SBA sales at Mountain America Credit Union. “Being prepared with the right information can have a big influence in the financial institution’s decision.
Consider these six tips to make the process easier before you apply for your small business loan:
Review your credit profile
While some SBA loans are offered to business owners with credit scores below 700, most need to be in the high 700–800 range. Use Credit Score Plus in online banking or our mobile app to review your credit report. You may also get a free copy of your credit report annually from annualcreditreport.com. If you notice any inaccurate information, correct it right away and bring the necessary documentation to your financial institution.Nail down your business plan
For new businesses, be sure your business plan is solid, clear and concise. State what your business is, why you need the money and how you’ll be successful. Financial institutions want to see that you have a plan to facilitate repayment. For existing businesses, providing a two- to three-year financial history is helpful.Prepare financial projections
Your monthly cash-flow projection is likely required; be prepared with projections 12–24 months out. Projections of profit and loss (P&L) statements and balance sheets are also beneficial.Get professional help
Your financial institution can answer questions, help you improve your application, and determine how much money you’ll need to launch or support your company. Note that the SBA backs roughly 75% of the loan, but the financial institution you select is on the hook for the other 25 percent.Work smarter
Utilize tools you already have at your fingertips. Does your financial institution offer business services—like cash management options or payroll services? Find out what they provide and put them to work.Take care of your greatest resource
That’s YOU! Make sure you are exercising, getting enough sleep and eating properly. And take a moment every day to do something outside of work that makes you happy. That could be drinking an uninterrupted cup of coffee in front of a window with an amazing view. Or meditating for five minutes. Or even calling your spouse or kids just to check in and say “I love you.”
Once you’ve secured your small business loan, your work is only just beginning! Here are a few more tips to run your business like a boss:
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Manage your cash flow—know what’s coming in and going out.
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Keep impeccable records—it will be easier to spot trends and keep an eye on profit margins and inventory controls.
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Provide stellar customer service—knowing your customer and giving them what they want will keep them coming back.
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Stay on top of laws and industry protocols.
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Be ready for change—it will happen.
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Shop the competition.
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Hire people you trust—you can’t do everything effectively.
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Learn from your mistakes and move on.
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Seek out a mentor—talking through challenges and brainstorms with an experienced, trusted mentor could be the most invaluable resource you have.
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Have fun—do what you love and share the passion!
Mountain America Credit Union is a full-service financial institution committed to putting our members’ needs first. It’s just the way we do business—whether you are big or small, brand-new or already established. Contact us today—we’re here to guide you forward to your next financial destination.
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Quick Summary
Use these tips to make the lending process easier before you apply for your small business loan.
Learn a foreign language
We live in a global society. No matter the industry, it’s likely that an English-speaking person will need to converse with someone who speaks a foreign language at some point.
While the exact numbers on the potential pay bump aren’t confirmed, experts estimate an hourly increase between 5 and 20 percent! Additionally, if an original career plan falls through, speaking another language is a valuable skill that can open the door to a wider spectrum of new job opportunities.
If you don’t know where to start, sites like Memrise, Duolingo and Open Culture are excellent jumping-off points for your teen. There are dozens of YouTube tutorials on syntax, grammar and expression for foreign languages, too. The only wrong step is not starting at all!
Master a piece of software
Learning to use a common piece of software can give your teen a serious leg up when it comes time to job-hunt. Look to programs with clear business applications. Anything from the Microsoft Office suite is a great first step. If cost is an issue, consider experimenting with GoogleDocs, Sheets and Forms. These are free and cloud-based, plus your teen can keep experimenting with them on his or her smartphone when they hit the road.
According to LinkedIn, competency in computer programs, such as Access and Sheets, is the #2 most in-demand skill of employers. These versatile programs can be adapted to a variety of interests. For example, while learning, your teen could track the statistics of their favorite baseball players, monitor the prices of hot clothing brands or catalog a music library. The important thing is that they start discovering the capabilities and limitations of these popular pieces of software.
Give those writing skills a good polish
For many positions, the ability to communicate ideas clearly is of vital importance. Like any other skill, the more you practice, the better you get. The best way to become a better writer is to write (and read)!
If you’re looking for a writing project for your teen, National Novel Writing Month (nanowrimo.org) runs an online summer camp for folks who want to bounce ideas for their next great story. Another option to suggest is blogging—people are always looking for a new take on the NFL draft, new albums, video games or anything else. Platforms such as Blogger and WordPress are free to try and offer the ability to network with other people with similar interests.
Elevated writing skills won’t just help with your teen’s job search, it will also be a useful skill during their school career. Papers and essay tests will be easier, and cover letters and college application essays will stand out. Encourage them to write, edit and write some more!
After your teen hits the books, or laptop, to master one of these activities, a reward is certainly in order. Try Mountain America’s Student Rewards Checking Account. Your teen can earn points toward travel rebates, gift cards, event tickets and more. Then, go buy a cupcake!
