How to Apply for Government Small Business Loans

The SBA provides many loan programs for small business owners. When you apply for a small business loan, your main goal is to have your application look as professional as possible, which means every little detail about yourself and your business must be added to your loan application. The amount of the loan you want depends on the needs of your business, your credit history, your business' credit history and business profitability.

1. Learn and study five credit factors you need to know about credit that lenders are looking for. Learn everything about credit to create an application that fits all the requirements of the small business loan you want. The five credit factors include resource management; this is used to manage the resources for your business. Working capital, your capital is the current assets you have over your current liabilities. Equity investment is the amount of capital you invest in your business to ensure that your business is up and running. Collateral is an asset that is worth something that is giving to a lender as security. Collateral is sometimes used when you cannot fulfill a financial obligation and that asset is taken away from you. The last credit factor is earning requirements. Earning requirements show all of your financial obligations and if you have paid for them in cash. Lenders analyze the credit factors to determine if they should accept or decline your loan.


2. Obtain private financing for funds you require before you apply for a small business loan. The SBA is required by law to not guarantee small business owners with loans if the business cannot obtain reasonable funds from their bank or private financial institution. Ensure that your business fits the requirements and descriptions of the SBA for small businesses. Find a lender and approach them. Find out what the requirements are for each loan you want to apply for and you are eligible for. In addition, which loan fits your business’s needs.


3. Decide which small business loan you want to apply for. Gather all the SBA forms you need for the loan you want to apply for. For instance, forms required for the basic loan program are Form 4, Form 4A, Form 413, Form 912, Form 1624, and Form 1846. Ensure that you have all of the appropriate form for the small business loans you are applying for. 


4. Complete all loan documentation you are required to do. A typical loan application is highly detailed and usually requires you to add an executive summary, loan repayment statements, pro-forma balance sheet, and your financial statement in the last three years, business profile, and resumes for key management. The pro-forma balance sheet must show all equities and borrowed money, and all future projects you are going to do, up to one year. Always consult with your lender for additional requirements you need for your small business loan and add them to your loan application, if necessary.