SBA Loan for Business Purposes
Entrepreneurship is no walk in the park. Yet, the eventual gains can justify the struggle. For some, these gains are greater flexibility, independence, and financial stability. For others, personal growth and legacy-building for future generations. This is true if you are starting a new business or expanding an existing business. You may be seeking to grow the business organically or by acquiring another business. While these paths all differ in approach, they all share one need – cash. An SBA loan for business purposes can help!
For this reason, the Small Business Administration (SBA) offers several loan programs. Obtaining an SBA loan for business purposes can be a complex, multi-step process. In this article, we simplify this process down to its essential purpose and steps. For more guidance, schedule a free consultation with Peak Business Valuation.
As a business appraiser, we help thousands of small businesses across the country. We also work with over 90 SBA lenders. As such, we can connect you with one that fits your unique business needs. To learn more about SBA financing for a small business, schedule a consultation!
Advantages of an SBA Loan for Business Purposes
A small business has many expenses. You may need cash to hire new employees or purchase more inventory. To finance these activities, you can sell equity ownership or take on debt. For more information, see Debt vs. Equity Financing. Both methods have their benefits. However, debt financing through the SBA has several advantages:
- Low-interest rates
- Greater access to capital
- Longer repayment terms
- Access to SBA educational resources
How are these advantages possible? The primary goal of the SBA is to help small businesses succeed. To encourage lending, the SBA guarantees a portion of an SBA loan. As such, lenders have less risk to lend to small businesses. As a result, borrowers have a better chance to secure an SBA loan. If an SBA loan for business purposes interests you, schedule a consultation. We are happy to advise you on the use of an SBA loan for a small business and connect you with reputable small business SBA lenders.
How to Obtain an SBA Loan for Business Purposes
Below, we briefly explain the steps on how to obtain an SBA loan for a small business. Keep in mind that these steps may vary depending on which SBA loan program you are applying for.
1. Determine Eligibility
First, see if your business qualifies for an SBA loan. While each SBA loan program is different, there are general SBA loan requirements. According to the SBA, small businesses must:
- Be a for-profit business
- Operate in the United States or a U.S. territory
- Have invested owner equity
- Explore alternative funding options before seeking to acquire an SBA loan
If you meet these requirements, you can now look at the specific loan programs available to small businesses.
2. Choose an SBA Loan Program
Second, determine which SBA loan program you will apply for. There are a variety of SBA loan programs with different requirements and benefits. To learn more about various SBA loan programs, see SBA Loan Programs for Small Businesses. Our team is happy to help you understand which SBA program may best meet your needs.
3. Find a Quality SBA Lender
Third, research and choose an SBA lender. The type of lender you work with may depend on which SBA loan program you are applying for. Peak Business Valuation has connections to many reputable SBA lenders. We can refer your small business to an SBA lender that can help!
4. Gather Business Documentation
Fourth, gather the necessary info to apply for an SBA loan for business purposes. These documents help the lender verify your business and personal information. Below, we list a few important documents needed for an SBA loan application:
- Business Plan
- Personal Income Tax Returns
- Personal and Business Financial Statements
- Various SBA Forms
To learn more about these documents, see Documents Needed for an SBA Loan.
5. Complete Your Application
Finally, complete your SBA loan application. This typically involves filling out several SBA forms, writing a business plan, and providing additional documentation.
Schedule a free consultation with Peak Business Valuation to start the process of obtaining an SBA loan for a small business! You may also consider reading 4 Steps to Obtaining an SBA Loan.
Obtaining a Business Appraisal for an SBA Loan
When seeking an SBA loan for business purposes, an SBA lender often requests an official SBA business appraisal. Peak Business Valuation provides SBA business valuations for more than 90 lenders across the country. This thorough valuation process determines the fair value of the business. Fair value provides essential insights into its financial standing. The SBA lender gains a clear understanding of where the business stands in terms of its market value. An SBA business valuation is often requested to assess the business as collateral for the SBA loan.
A business appraisal for an SBA loan also includes an assessment of the business’s health. This evaluation goes beyond mere financial figures. A business appraiser delves into the key value drivers and risks of the business. Understanding the business appraisal is essential for business planning. The future trajectory of the business depends on it! Armed with these insights, you can capitalize on strengths and mitigate weaknesses. This may involve optimizing operational efficiency or exploring expansion opportunities. Obtaining a business appraisal for an SBA loan empowers strategic decision-making.
The Bottom Line
To conclude, an SBA loan for business purposes can help your business succeed. While the application process may be complex, Peak Business Valuation can help. As a certified business appraiser, we work with thousands of small businesses. With our network of more than 90 SBA lenders, you can find the right lender for your small business.
Start today and schedule a free consultation with Peak! On this brief call, we discuss your SBA lending needs and connect you with a quality SBA lender. Then, when you need one, we are happy to provide an official SBA business valuation. See you soon!
