Getting an SBA loan can be a lengthy process, taking up to 45 – 60 days for the average small business borrower to be approved and funded (although using SmartBiz can get you funded within 30 days). Knowing what to expect throughout the loan process, and having all of the documentation you need before you apply will help you get funded quicker.
Here is an SBA loan checklist of everything you need to know and have ready before you apply for an SBA loan:
- Know if you’re eligible for the loan
- Find a bank that lends SBA loans
- Put together your loan package with the right documentation
- If Using Funds to Buy a Business You’ll Also Need:
- Complete All SBA Forms
If you have everything checked off of the list above then you’re likely ready to apply for your SBA loan! SmartBiz can make the rest of the process very simple. They can approve you for up to $350,000 for working capital, and they can do it faster than any other SBA loan provider we’ve seen – typically getting you funded within 30 days.
Applying For an SBA Loan in 4 Steps
As show in the checklist above, the SBA 7a loan process generally takes 4 main steps to complete.
- Make Sure You Qualify
- Find the Right Bank
- Gather Needed Documentation
- Complete All SBA Forms
#1 Make Sure You Qualify
If you don’t meet the minimum qualification requirements set out by the bank or the SBA, then you’re just wasting your time applying for a loan. The qualifications listed below are minimum qualifications. If you want to be assured that you will be approved you should exceed all of these standards.
- 680+ Credit Score: All business owners (20%+) must exceed this threshold.
- 2+ Years in Business: While startups can apply for and receive SBA loans, it is more difficult, and executive level industry experience will be required. If you’re buying a business then that business needs 2+ years in business, and at least 1 owner must have executive level industry experience.
- Business is Profitable: For best approval chances you should be profitable for the last 6-12 months.
- 10%+ Down Payment: The more you have to put down, the higher your approval chances are, but 10% is the minimum that is acceptable.
- Have Collateral to Secure the Loan: It’s not required that you secure 100% of the loan but a substantial amount will be expected. This means more than a blanket lien on company assets. You’ll need at least 1 substantial hard asset (a house, a building, some land, etc..).
- Meet All SBA Requirements: Since the SBA guarantees these loans you’ll also need to meet all the minimum requirements that they provide, which are:
If you don’t meet the minimum requirements, or if you need to fill a short term cash flow gap in less than 30 days, then you may want to check out our article on short term loans and other alternative financing.
#2 Find the Right Bank
You’re obviously going to need a bank that lends SBA loans before you can move forward in the process. However, what most small business owners don’t realize is that most of the time finding the right bank is necessary to get funded quickly, or to get financed at all.
If you’re looking for a loan of up to $350,000 then using loan provider SmartBiz is, in our opinion, your best choice. They speed up the loan process by matching you with the right lender for your business and getting you funded within 30 days.
If you need more money than that then you can look at using the SBA’s lender search tool. They help you find lenders that are SBA approved and can get you funded for up to $5,000,000. Before choosing a lender make sure you ask them plenty of questions about their loan history and application process. For example:
- How many SBA loans have they funded?
- What is their application process?
- How long does it take to get it pre-approved?
- How long is their average funding time for SBA loans?
- How much collateral will I typically need?
- What are your current approximate interest rates?
#3 Gather Needed Documentation
If you have chosen a bank that is a good match for your financing needs, the biggest opportunity for you to improve the overall funding time is through the documentation process. You should expect to have all minimum documentation requirements prepared before applying to speed up the process, because going back and forth with loan officers on needed documentation can cost you valuable time in getting funded and valuable time away from your business.
Here is a list of the minimum required documentation that you’ll need in order to get funded with an SBA loan:
- Current Business Financials
- Projected Business Financials (1 Year)
- P&L Statement
- Business Leases
- Business Ownership/Origination Documents
- Business Overview & History
- All Business Licenses
- Business Tax Returns (2 Years)
- Personal Tax Returns (2 Years)
- Resumes of All Business Owners & Executives
You might also need a business plan to show the loan provider how you’re going to be profitable moving forward, and how you’re going to be successful. Having an excellent business plan may not improve your approval chances a whole lot, but having a bad one will likely end your chances before you begin.
#4 Complete All SBA Forms
Here is a list of required SBA forms that must be accompanied with any SBA loan application:
- SBA Form 1919 (Borrower Information Form)
- SBA Form 912 (Statement of Personal History)
- SBA Form 413 (Personal Financial Statement)
- SBA Form 159 (Fee Disclosure Form & Compensation Agreement)
The Smart Hack
The typical SBA loan funding timeline takes about 45 – 60 days. If you’re looking to borrow up to $350,000 in 30 days then an SBA loan from SmartBiz is your best option. They will match you with the best lender for your financing needs, which speeds up the application process and improves your overall approval chances. Visit them today and get pre-qualified within 5 minutes.