How to Determine Your Financial Needs When Applying for an SBA Loan
Many businesses can benefit from an SBA loan. This type of financing tends to come in smaller increments than other methods. Before applying, it is vital for the business owner to develop a comprehensive plan that outlines what the funding is going to be used for. An entrepreneur also needs to assess his or her company’s financial needs. By figuring all this out beforehand, the employer will know how the loan can best be used for and how much it needs to be. With that in mind, there are some questions business owners need to ask themselves before scheduling a meeting.
How Will the Loan Help Your Business Plan?
Part of your business plan should outline where you want the company to go in the next few years. Determine how the loan will best serve that ultimate goal. For example, you need to decide whether the loan should be used to acquire better equipment or if it should be used on advertising.
Is the Business Seasonal?
Many organizations go through dips and spikes throughout the year. They may be incredibly profitable for certain months but for other months struggle to make ends meet. For seasonal businesses, an SBA loan can be great for getting through any rough patches. Once the business starts making more money again, it will be a lot easier to pay back the loan.
What Are Your Company’s Risks?
All businesses have risks. You need to be aware of what this risk is for your company so that you can plan accordingly. For example, if your business is in an industry that is dying, then you need to be aware that the lender will bring that up during a meeting. You need to be capable of addressing any concerns and assuaging fears.
What Is the Urgency?
You should be able to anticipate times when your business will require a loan. Generally, you do not want to wait until your company is in dire straits to apply for a loan. Plan ahead so that there is time until you actually need the money in your account. It can sometimes take weeks to get approved for a loan, so you do not want to be in an urgent situation where the funds are needed immediately.
You do not want to meet with a lender and not thoroughly understand your company’s financials. By going into a consultation prepared, you will have a much better chance of being approved for an SBA loan.