Assemble a killer SBA loan package that gets results

Run Your Business May 03, 2016

When it comes to landing an SBA loan, do your homework to achieve the result you want

To give your loan application the best chance for success, you’ll need to do some hard-core prep work well in advance.

If you’re planning to take out a loan to expand your business or upgrade equipment in the near future, now is a good time to begin preparing materials for your application package. A common path for seeking funds for expansion or upgrades is through the Small Business Administration (SBA) loan program.  

It’s a common misconception, but the SBA doesn’t actually lend money directly to business owners. Rather, you apply for a conventional loan under SBA guidelines with one of their banking partners. The SBA provides a loan guaranty to the lender which can allow the lender to offer greater flexibility in loan terms and interest rates. 

To give your loan application the best chance for success, you’ll need to do some hard-core prep work well in advance. Each loan program has some unique requirement, but all applications have a core set of documentation needs. 

Business Structure and Leadership

You’ll need to describe the purpose and structure of your business and provide a copy of your business plan complete with projected financial statements. You’ll also need to describe your business and/or management experience. The lender also will gather personal information, such as previous addresses, educational background and criminal records for you and your leadership team. 

Legal Documents

Lenders typically want proof that you have your ducks in a row with regard to basic business legalities. You should be prepared to provide your Articles of Incorporation, franchise agreements, licenses or registrations required to do business in your state and industry and any applicable lease documents. 

Credit Worthiness

The application process typically will review both your personal and business credit reports, income tax returns and bank statements. You’ll also need to provide the business financial statements, including a profit and loss statement, cash flow and balance sheet and a complete accounting of all business debt and creditors. Most lenders have a collateral requirement; because assets of the business can be considered as collateral, a thorough set of financial statements is essential. 

Another key factor lenders carefully examine is your debt-to-worth ratio, which gives a read on how much of your own financial skin is in the game. High investment with minimal company debt makes you a more attractive credit risk. Other financial measures of interest to the lender are the working capital you have on hand to manage the business, management of accounts receivable and payable and how quickly you deliver your product or service after the order is placed. 

Purpose of the Loan

Your reasons for wanting a loan may seem painfully obvious to you, but you’ll have to make a more compelling case for the lender. You’ll need to provide a detailed description of what you want to accomplish with the loan and a thorough discussion of exactly how the money will be used to grow your business and, ultimately, improve productivity and profitability. You need to make a strong case to prove that you are a good risk who will repay the loan in full. Take the time to have this response fully thought out. As passionate as you may be about your business prospects, your loan application isn’t the time to wing it. Be prepared with your explanation of why you should have this loan.

Examine your needs

Before you begin the tedious process of gathering your loan documents, talk to you lender about your goals for the business. Your banker can discuss the options and suggest the product that best suits your needs so you can focus your efforts.

Armed in advance with the right information, you’ll be well prepared to assemble a successful loan package. 


Kelly Burkart is a freelance writer from Minneapolis, Minn. While she has spent most of her time writing about financial services the past 15 years, she has also explored and written about everything from cardiovascular health to travel, higher education and sustainable energy practices.

Article by U.S.Bank, Content Strategist/writer