Part 1: Preparing for your loan
You are primed to make your big move to the head of the pack – but those growth plans you’re considering need an all-important influx of capital. A Small Business Administration (SBA) Ioan can be used to expand your operation, secure new real estate, for construction or to finance new equipment. But some forethought, time and effort are required to ensure a positive experience. It really does pay to have the right team behind you (spoiler alert: we happen to know a great one!).
This two-part comprehensive guide will take you through the process and let you know what documents and other information you will need and when you will need it. That – and assistance from our SBA lending team – can give you peace of mind as you progress from preparation to closing.
Contact a Business Development Officer to discuss your needs
Every First Internet Bank SBA Business Development Officer (BDO) has the experience and understanding needed to create the SBA loan package that fits your specific needs. As a Preferred SBA Lender, we can tackle even challenging lending scenarios efficiently and move your loan to closing quicker.
Our BDOs have worked with entrepreneurs from a wide range of backgrounds (in fact, First Internet Bank itself was founded by one) and in a variety of business categories. That has helped to make us one of the nation’s fastest-growing SBA lenders. It’s also your assurance that your loan will help you meet your goals now and in the future.
Provide requested information and receive your custom proposal
You’ll be required to provide detailed information when you make application for a Small Business Administration loan, so it’s best to be prepared in advance. Having this information at hand is a good start:
- Credit rating: Know your credit score; your SBA lender will check it. Visit Experian®, TransUnion® and/or Equifax® to see how your credit looks. You can also go here for a free review of all three.
- Personal background: ready to describe your education, past work experience and other background details with a written resume. If there are previous “bumps in the road,” such as bankruptcy or even criminal convictions, they’re not necessarily deal-breakers…but you’ll need to explain them.
- Business structure: The ability to clearly describe the day-to-day structure of your business and its management is critical. Providing an objective review of how your company is currently structured allows potential lenders to see how you run your business. Example plans can be found on gov.
There are also lender forms to be completed that collect a variety of information; the requirements and length will vary from lender to lender, but you can expect to have requests for these:
- Your business plan: Though not required for every SBA transaction, your formal business plan is still one of the most important parts of most applications. A lender will want to understand what your business is and does, your reasons for the loan, what goals and objectives you have and whether the growth you anticipate from the loan will involve adding employees. If you’re purchasing an existing business, you will need to provide documentation of the asking price and other terms of the sale. If you need help with your plan, your local or statewide Small Business Development Center (SBDC) offers free assistance.
- Statement of intent: A detailed explanation of how the funds will be used is nearly as critical to a potential SBA lender. Whether you plan to expand your square footage through an increase of your current space, envision new construction, add needed equipment to build production volume or staff up to meet customer demand, be ready to explain your intentions.
- Business history: Prepare an overview and history of your business. Possible additions to the timeline should include a client list; detailing past successes and community involvement can also be advantageous.
- Debts: Just as it would be if you were seeking a personal loan, your current company debt load will be important to any lender. Be able to provide a current and complete accounting of what you owe.
- Your personal financial involvement: The financial stake you have in your business will also be considered by lenders. Their willingness to make the loan is at least in some part based on what you’ve been willing to invest in its growth. Be prepared to inform them about your personal assets and liabilities.
- Ownership: It’s important to fully disclose the percentage of ownership in your business and in any other companies. The SBA requires lenders to obtain this information in order to make sure that loan amounts don’t exceed legal maximums, and that your businesses are considered small as defined by SBA (13 CFR § 121.107). If another company holds ownership in yours, you’ll need to provide full ownership details for that company, as well.
- Franchising: If you are looking at a franchise opportunity, a franchise disclosure document and agreement are required.
Review and accept the offer
Once you have submitted the requested documentation, your BDO will compile it, have it reviewed and complete a customized offer for you to consider, based on your specific business needs. Keep in mind the full process here takes time, so don’t expect a loan in the same month you apply.
With your acceptance of the offer and signature, the loan process is officially underway.
Provide credit documentation
To ensure that your loan is viable, your credit information is required. Generally speaking, it is not significantly different from the documentation you would need to provide if you were seeking a personal loan. Here’s what you should expect to provide:
- Business legal documents: Individual, specific documentation is required for the different types of legal entities (corporations, sole proprietorships, partnerships, limited liability companies and limited liability partnerships). It will be necessary to produce any state licensing documents indicating your ability to legally conduct business, your business Employee Identification Number (EIN) and insurance information. Other materials may be required depending on the nature of your business and the type of loan you seek.
- Loan application history: Have you previously applied for a loan from the SBA or any other government body? Whether or not the loan was approved, this information will be required by potential lenders. Be sure to have any past loan paperwork available for review.
- SBA forms: The SBA forms you’ll need to complete (which includes SBA 413 – their personal financial statement form) can be found on the Borrower Information Forms page on the SBA website. We can assist in making sure you select the correct ones.
- Purchase Agreement or Letter of Intent: A fully executed purchase agreement or letter of intent is requested to identify the terms of the purchase, whether it be a business purchase or commercial real estate.