NASE Blogs

Small Business Administration Loans

Mar 28, 2009

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.