For Business

Unlocking the SBA Loan Application: What You Need and How to Succeed

First Bank of the Lake
First Bank of the Lake
Couple looking at a computer

Whether you're launching a startup or expanding your small business empire, an SBA loan can be a game-changer. But navigating the application process can often feel like preparing for a marathon. But don’t worry, at First Bank of the Lake, we’ve guided countless business owners through the ins and outs of SBA loans, and we're here to help you make your application a success!

1. Know Your Loan Type

First things first—do you know which type of SBA loan you're after? The SBA offers a variety of loans, with the 7(a) loan and the 504 loan programs being the most popular choices.

7(a) Loan: Ideal if you're looking for start-up financing, working capital, purchasing real estate, or refinancing business debt.

504 Loan: Best for purchasing or refinancing large business assets like real estate or equipment to scale your business.

Pro Tip: Explore all your financing options, including conventional loans, to find the one that best fits your business needs. Not sure which route to take? The experts at First Bank of the Lake are ready to guide you to the perfect solution!

2. Prepare a Business Plan

Your business plan is the cornerstone of your SBA loan application. Think of it as the guide for your business journey - it shows the lender exactly where you're headed and how you plan to get there. Here’s what it should include:

  • Executive Summary: A clear overview of your business.
  • Market Analysis: Show that you understand your industry and competition.
  • Financial Projections: Lenders love numbers - break down your current or projected revenue and expenses.
  • Loan Purpose: Be crystal clear on how you plan to use the loan funds.

Pro Tip: Be specific. Simply saying you need the loan to "grow the business" isn’t enough - it's too vague. Provide clear details on how the funds will directly impact your business and drive it to the next level.

3. Financial Documentation

You will need to provide a comprehensive financial history to demonstrate your business's performance to lenders. If financial data isn’t your strong suit, at First Bank of the Lake, we will guide you to the best resources to ensure your financial data is appropriately packaged for underwriting analysis. Our team of professional lenders are seasoned with years of experience assisting small business owners such as yourself. SBA requires business financials such as:

  • Income Statements (current & previous 3 years): Show your business’s profitability.
  • Balance Sheets (current & previous 3 years): Detail your assets, liabilities, and equity.
  • Tax Returns (previous 3 years): Lenders want to ensure your business is legitimate and thriving.
  • Existing Debt Schedule: Details all outstanding debt to creditors.

Pro Tip: At First Bank of the Lake, we recommend organizing these documents ahead of time. Lenders love applicants who are prepared—it’s the business world’s version of “A+ for effort.”

4. Personal and Business Credit

Your credit score is one of the biggest factors in SBA loan approval. Both your business and personal credit will be examined. If your credit score is less than stellar, don’t panic! There are steps you can take to improve it, like paying down debt or correcting errors on your credit report.

Pro Tip: First Bank of the Lake can help you check your credit report and offer suggestions on boosting it before applying.

5. Collateral & Down Payment

SBA loans often require collateral—something you’re willing to put up as security in case things don’t go as planned. Typically, a loan request will not to be declined solely based on inadequate collateral. In fact, one of the primary reasons Lenders use the SBA-guaranteed program is for those applicants that demonstrate repayment ability but lack adequate collateral to repay the loan in full in the event of default.

For some loans, you’ll also need an equity injection also known as a down-payment. The SBA typically requires 10-20%. The funds must be seasoned in your business checking and not cash on hand.

Pro Tip: There is no need to be concerned if you don't have significant financial resources to offer as collateral. The SBA commonly accepts various collateral types including real estate or equipment. At First Bank of the Lake, we can assist you in determining which assets may qualify.

6. Fill Out Your SBA Forms Correctly

There are several forms you'll need to complete for your SBA loan application, and attention to detail is key here. Missteps or missed fields could delay your approval. Commonly required forms include:

Pro Tip: Filling out forms isn't always exciting, but it's important! Our team at First Bank of the Lake knows these forms like the back of our hand. We’ll make sure all your i’s are dotted, and t’s are crossed.

7. Seek Guidance Early On

One of the best ways to increase your chances of an SBA loan approval is to partner with an experienced lender. At First Bank of the Lake, we specialize in SBA loans and offer personalized guidance from start to finish. Whether you need help choosing the right loan, organizing your documents, or submitting your application, we’re here for YOU! Think of us as your business's personal trainers. We know the workout (loan process), the best techniques (strategies), and how to avoid injury (common mistakes).

Applying for an SBA loan doesn’t have to feel like scaling Mount Everest. With a bit of prep work, attention to detail, and expert guidance from First Bank of the Lake, you’ll have everything you need to secure the financing your business needs to grow.

Have questions or need assistance with your application? Give us a call! We’re always ready to help! Let’s take your business to new heights – together!