Before you start to do any type of task, you have to make sure that you are well prepared in advance to handle every difficult situation. This can be done when you have proper planning and determination of pulling it off.
What do you do when you are preparing to undertake a task? Make a plan and get ready with the necessary record that is required to commence the job at hand. If you are preparing so well to complete an ordinary task then it is vital that you be willing to do the same when applying for SBA Loans.
Favors gained by SBA Loans:
These loans are primarily used for businesses that are already running but that is not the entire case. The people who want to start a new business can also gain favors from it. Yes, it is true that new businesses can benefit from it because of the following favors that it gives;
- Unlike other loans, the paying back cycle is longer. Different terms are for various businesses like for real estate the period is 25 years, for equipment purposes 10 years and 7 years for normal uses.
- It is very rare that a lender will request a down payment from a borrower. If it is the case then a very low percentage of the total amount of loan money is given10-20% of the amount. But in other cases, the deposit depends on a few things; borrowed money, use of that amount and financial profile.
- A favor in the form of lower interest rate is a big plus point for the borrower. The borrower gets worried about the fee in the form of the interest rate as a higher rate becomes difficult to manage. But SBA Loans have a minimum rate of 6% and SBA makes sure that every lender abides by the rule.
- The loan amount that you borrow can be used for any reason at all. But some of the lenders are very keen on how the borrower will use the loan amount so a detailed plan must be submitted to satisfy the lender. Apart from this, you are free to use the loan anywhere you want to.
- At times the businessmen need a large amount of money to expand their company. The SBA Loans can provide the borrowers with a capital of up to $5 million. This amount can be gained from 7(a) loan which is the smallest type of SBA Loans.
- SBA is an organization that tries to focus on helping others especially women, minorities, veterans and the disables. So it is associated with other departments to give training and mentoring to those who need help.
Documents for Businesses that are new:
There are several online programs like Orumfy that are assisting the businessmen with vital information on how to prepare for applying for different SBA Loans. Not only existing businesses but also new ones can apply for them. But the requirements of both are different as below are for the new businesses;
A form of Application:
The primary thing you need to gather and set is the application form of the loan. You can either acquire it online or get a hard copy personally from the lender. This is important for both new and current businesses. Fill out the form correctly by taking advice from a lawyer so that you cannot make any mistake.
Personal Account History:
As you are applying for the loan for your new business; you need to provide the lender with proof and details of your personal account because on the basis of it the lender will decide to lend you the money.
Paperwork proving of Repayment:
It is crucial that you convince the lender that you can pay back the loan amount in the required time. How will you do that; simply, by giving proof in the form of repayment history of your credit card.
Existing Companies Submit Record:
The records that the older businesses have to submit are different from others. The following are the documents required to complete the loan procedure;
Evidence of the Business:
Various information that can prove the existence of the business must be provided because there are many people who apply of loans but don’t use it for that purpose.This includes full address, phone numbers, number of employees and their contact info and the tax number of the company.
Credit History Report:
A credit score of 600 or more should be mentioned and given as confirmation. If the borrower fails to do so then the lender can get it through the social security number.
Information regarding your business financials is a vital part of your application. The various bank statements that are essential are Business debt schedule, Balance sheets list your financial assets and liabilities and Statement of cash flow.
Various Licenses and Certificates:
Most of the lenders ask the borrowers to give various certificates and licenses so that it can be proved that the business can give profit and is safe to invest in. These include Business licenses, Certificate of good standing, Corporate Bylaws, Articles of incorporation or organization, Commercial lease and Important contracts.
So you must have understood that there are different documents required for SBA loans when you are applying for a new business or an existing one. So keep in mind which document is used for which business type.