How to Qualify for an SBA Loan
Small business owners looking to take out a loan often turn to the Small Business Administration (SBA) for help. An SBA loan can provide much-needed capital, but it’s not always easy to qualify for one. Before applying, it’s important to understand what you need to be approved.
Look at Your Credit Score
The first step in the SBA loan qualification process is to have a credit score of at least 620. This number reflects how well you’ve managed your finances in the past, and lenders use it to measure your ability to repay the loan. Additionally, applicants typically need two years of operating history with their business to be approved. The longer you’ve been in business, the better your chances are of being approved.
How Much Funding Do You Need?
It’s also important to understand how much capital you need and how it will be used. You must present a detailed plan of how you intend to use the loan proceeds to the lender, along with any collateral that can be used to secure the loan. Lastly, you must have an appropriate debt-to-income ratio to be approved for an SBA loan. This means that your total monthly debt payments shouldn’t exceed a certain percentage of your gross monthly income. The exact percentage varies from lender to lender, so it’s best to check with your prospective lender before applying.
By understanding the qualifications necessary for an SBA loan, you can give yourself the best chance of being approved. It is important to remember that every lender has different requirements and standards, so it’s wise to shop around and compare options before settling on a particular one. Additionally, be sure to read the fine print in any loan agreement to make sure that you understand all the terms and conditions. With a little bit of preparation, you can increase your chances of being approved for an SBA loan and get the funding your business needs. Contact Leading Edge Commercial Capital today to get an SBA 7a or 504 loan for your business.