If you need funds to purchase or expand a business and have not had any luck
getting a loan approved by your local bank, applying for a Small Business
Administration (SBA) loan guarantee may help.
The SBA helps small
businesses grow by providing a guaranty for a portion of the loan that a lender
makes to your small business. This means that if you default on repaying the
loan, the lender does not absorb the entire loss.
There is a lot of
paperwork involved in applying for any loan. This is true with SBA/bank
financing. The SBA has a list of required documents that is summarized
below.
- Application for loan
- Statement of personal history
- Personal financial statements
- Current detailed and signed Balance Sheet and Profit & Loss Statement
along
with three years of supplementary schedules
- Detailed one year projection of Income & Finances with an explanation of
how you expect to achieve the projected results
- List of subsidiaries and affiliates including any concerns that the
applicant holds a controlling interest in and other concerns that may be
affiliated
- Certificate of Doing Business (stamped by corporate seal if incorporated)
- Agreement to comply with SBA non-discrimination regulations
- Signed business federal income tax returns for previous 3 years
- Signed personal federal income tax returns for previous 3 years
- Personal resume including business experience of each business principal
- Brief history of the business and its problems including how the SBA loan
will
help the business
- Copy of the business lease or note from landlord giving terms of proposed
lease
- For purchase of an existing business: Current balance sheet and profit and
loss statement, previous 2 years federal income tax returns of the business,
proposed bill of sale including terms of sale, asking price with schedule of
inventory, machinery & equipment, and furniture & fixtures
As you can see, this is quite a lot of information to accumulate, although
much of this has probably been submitted in previous attempts to obtain bank
financing.
Most banks have loan officers who are familiar with this
process and can offer guidance. The SBA website at www.sba.gov offers information and forms to be completed. This
website also refers you to counselors who can assist you with this process if
you find the process difficult to understand.
Remember that the SBA’s
mission is to help small businesses be successful. The effort involved will be
well worth it when your business is a thriving success.