– Rachel Zippwald is the vice president of California Bank & Trust, a major SBA lender. The views expressed are her own. –
Small businesses seeking financing are in for a bit of good luck these days.
Special Small Business Administration incentives, such as the waiver of certain fees, are still available until the end of the year, so now is the time to apply for financing. There are, however, a few caveats.
While SBA loans are available, it may take a bit more work to obtain one and banks are requiring more information than they have in the past. The following are a few tips to facilitate getting your SBA loan approved.
1. Provide details on exactly how much financing you need and how you will use it. Banks like specifics, so be prepared to provide a precise dollar amount and give details of how you will use the funds. For example, if you’re seeking $125,000 to expand your business, explain to your lender how you will use the funds, such as you need $75,000 for working capital to support three months of expenses, and another $50,000 for seven networked computers and a server. Banks are impressed with research, so provide a written quote for the equipment. If you’re planning to consolidate debts and refinance for a longer term, provide copies of your promissory notes and state how much you think you can save with the refinance. Detailed loan amounts with copies of bids, promissory notes or proposals can help strengthen your loan package because your lender can understand the facts backing up the request.
2. Provide information about company management. When banks lend money, they like to understand who runs the company and to be familiar with their backgrounds. This is a key factor in presenting your loan for approval. Help your lender by providing a resume for each owner or key employee and describe their functions and responsibilities. If certain key positions have not yet been filled, include a thorough job description of the type of person you are seeking. This will confirm for the lender that you have analyzed your needs and have determined the requirements of the position.