How to apply for SBA business loans | Business

Step 1: Write a history and overview of your business

An important item for your loan application is helping your lender understand your business and the project for which you seek financing. You can do this by writing a history of your business. Here, you’ll explain when and how you founded the business, how the business has grown over the years and what major challenges and competition you’ve faced. Your narrative should also explain why you’re seeking an SBA loan and what business goals the SBA loan will help you accomplish.  It should specify how much money in loan proceeds you seek along with details on how the funds will be spent.

Step 2: Include the required financial statements

All SBA loans require you to submit a profit and loss statement or earnings report that’s been updated within 120 days for 7a / 504 (180 days for an SBA Express Loan, which lets business owners receive a decision from their lender much faster, typically within 36 hours) of the date of your loan application. This gives the lender and the SBA a snapshot of your business, so you’ll also want to include a balance sheet with detailed breakdowns of assets or liabilities.

You’ll need to provide projected financial statements, which should include a full accounting of your expected income and finances for the coming year. The SBA also asks that you attach a written explanation for how you arrived at those projections — and how you expect to meet them. If you use accounting software, you can use it to generate these statements. Accounting professionals also can provide the necessary statements and schedules.

Step 3: List all ownerships and affiliations

Any business with subsidiaries, affiliates, franchises or stock holdings in other companies must include a full list of those arrangements with the loan application. Many businesses won’t have information to include here, but it’s important to be thorough: If you or any of your partners have any ownership stake in another business, it must be listed.

Businesses planning to use the SBA loan to finance business acquisitions also need to provide supplemental information on the business they plan to acquire, including:

  • Profit and loss statement and balance sheet
  • The most recent three years of federal income tax returns
  • Purchase Agreement or Redemption Agreement, including sale terms, and statement as to why the current owner is selling
  • Asking price and schedules of inventory and physical assets such as furniture, equipment and fixtures

Step 4: Copy important business documents

Your business loan application should also include copies of these documents:

  • Business certificate or license
  • Business and personal federal income tax returns for the previous three years
  • Any previous loan applications you’ve submitted to any lender
  • Personal résumés for each owner or partner
  • Your current lease or a signed letter from your landlord that outlines the lease terms

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