In the US today, small businesses created more than 60 percent of all new jobs available in the US last year. There are over 30 million small business companies doing business today. Luckily there are funding sources available to make these entrepreneurial dreams a reality.
If you too, want to find ways to raise money to start a business, then this article is for you! Find out more about what it takes to fill out an SBA loan application.
What are “Small Businesses?
“Small businesses” are privately owned companies that have a defined number of employees and annual revenue depending on their unique industry. Most small companies are considered a “small business” if they have less than $750,00 in revenues and hire no more than 250 employees. Sometimes you’ll hear a small business described as either a corporation or a partnership.
What are SBA Loans?
SBA Loans are low-interest, long-term loans awarded to small businesses through the US Small Business Administration (SBA). The SBA cooperates with pre-approved lending institutions to provide loans to small businesses.
The SBA doesn’t lend money directly to small companies. Their job is to secure a part of these loans, which lowers the risk for the other lending partners.
SBA Loan Application Requirements
SBA loan requirements will vary between lenders. Most lenders, however, will require the following criteria:
- The company is based in and operates within the US;
- The company is officially registered as a for-profit enterprise;
- The company fits one of the SBA’s definitions of “small business”;
- You can show you’ve invested your own money and time to the business;
- Your business has been operating for a significant amount of time;
- You have outstanding personal credit (your FICO score should be higher than 650);
- Your business can demonstrate reliable revenues and profitability; and
- You have a debt service coverage ratio that demonstrates you can cover your outstanding financial obligations.
Once you have the necessary backup documentation for these application requirements, it’s time to complete the application forms for a small business loan.
SBA Loan Application Forms
Although there are different loan types, each SBA loan application requires the following forms:
SBA Form 1919: Borrower Information Form
This form provides your lender and the SBA preliminary information on your businesses’ owners and investors. Lenders will use this form to make sure no one associated with your company has any conflicts of interest.
SBA Form 413: Personal Financial Statement
This form describes the business owner’s personal assets and liabilities. This form also describes your personal collateral and other outstanding debts you may have as well. You can learn more here on filling out this important statement.
SBA Form 912: Statement of Personal History
This form asks for information on any current or past criminal convictions. SBA loan applicants aren’t eligible if they are currently involved in criminal matters but may qualify if they have a past history of criminal activity. The SBA decides these applicants on a case-by-case basis.
Ready to tackle that SBA loan application today? You can start by collecting your records together to meet those minimum SBA loan requirements. Request your credit scores so that you demonstrate your exceptional credit history.
Download the necessary SBA loan forms from the US SBA website. Talk to your accountant to help you identify your assets and liabilities for your SBA Form 413.
Don’t forget to check our website for more helpful information on starting your new business. We even have advice on how to raise money without loans. We’re here to help make sure your small business dreams come true.