Using SBA Loans to Finance Your Startup

Using SBA Loans to Finance Your Startup

Financing can be a challenge for a new business startup. SBA loans can be an excellent financing source because they are specifically focused on small businesses, making it easier for them to get the funding that they need.

What are SBA Loans?

SBA loans are small business loans that are partially guaranteed by the Small Business Administration (SBA) and offered by partnering lenders including banks, credit unions, and online lenders. SBA loans have stringent lending standards, but their low interest rates and favorable terms make them an excellent way to finance a startup.  SBA loans are available only to small businesses and certain business classes are excluded.

How Can SBA Loans be Used?

SBA loans can be used for a range of startup costs including working capital, purchasing inventory, paying employees, purchasing land for some aspect of your business (but not investment property,) paying for the construction of an office, retail, or warehouse space, buying equipment or furniture, paying off debt, or using marketing and advertising to grow a business.

How to Apply for SBA Loans

Here’s how to apply for an SBA loan:

  1. Make sure that your business is eligible.
  2. Gather the required application documents. These include:
  • A personal credit report.
  • Three years of tax returns.
  • A formal business plan and financial documents with a one-year cash flow projection.
  • An entity document and business license.
  1. Review potential lenders and choose one. (The SBA offers a lender match tool to assist potential borrowers.) It is useful to ask potential lenders how many SBA loans that they make, how often they make them, and what is the dollar range of the loans that they make.
  2. Apply then wait. The entire process may require 30 days to several months.
  3. Once approved, sign the agreement then proceed with a loan repayment schedule.

Seek Expert Financing Assistance

Contact the financial experts at Diamond Capital to help you achieve long-term business growth and success. Our financial professionals can help you secure appropriate funding to meet your business’s financial needs.