5 steps to take advantage of SBA financing

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Looking for financing for your small business? The U.S. Small Business Administration (SBA) offers a variety of financing programs—many with unique flexibility and terms. These five steps will help get you started.

1. Commit to your goal—improve, grow, restructure.

Conduct a strategic review of your capital needs and financing options. View your goals through an SBA lens. How does your business narrative match your capital needs? What impact will capital investment have on the future of your business? Frame your capital options around your overarching business strategy of improvement, growth, or restructuring. A clear statement of your business’s plans is a prerequisite for securing financing. 

2. Develop “what if” scenarios.

Gather a small group of trusted financial advisors—banker, CPA, CFO—to brainstorm initiatives you would pursue if you had greater access to capital. Create rough estimates of what your best ideas would cost and your expected return on investment. Then ballpark your current sources of cash. Consider any local business resources you could use to help you assess your ideas.

3. Assess your capital needs against SBA criteria.

The SBA backs loans to businesses, not individuals. They consider your business’s location, ownership, and plans for earning income. They particularly look for the following:

  • Businesses with actively involved, experienced owners – They look favorably on borrowers with direct or strong transferrable industry experience, capable of creating and executing a successful business plan.
  • Solid, focused businesses – They prefer “for profit” businesses with a solid business plan and with a strong history of paying prior business debts.
  • Acceptable personal and business credit – A personal guarantee is required for borrowers with greater than 20% ownership. Personal liquidity must be within SBA standards.
  • U.S. base – Only businesses operating in the U.S. or its territories will be considered.
  • Demonstrated need and a sound business purpose – You must demonstrate your business’s need for capital to fund growth or improvement. And show what impact that capital will have on your business’s financials.

4. Find your best match.

Ask your banker to review how each of the SBA loan programs compares to conventional sources of capital.

  • SBA 7(a) Program – This is the most popular and flexible loan. It can be used for a wide variety of financing needs including goodwill (for restructuring ownership or acquisition). Loans up to $5 million are possible with down payments as low as 10%.
  • SBA 504 Program – This is typically used for commercial real estate and large equipment transactions. Both fixed and variable rates are available. Loans terms may extend up to 25 years. Capital plans that include two uses for capital (like real estate and acquisition) can sometimes combine the 504 Program with the 7(a) Program to access greater amounts of capital.
  • SBA Express Program – These are designed to provide both shorter-term working capital and asset needs with a streamlined process. The Export-Express program is designed for companies with existing exports or who plan to begin exporting to other countries.
  • SBA Specialty Programs – These include programs for disaster recovery loans and other special focus programs. 

5. Take advantage of expertise and support.

As one of the nation’s originators of SBA loans, we can help you select the best programs and proceed through the underwriting process. Talk to your Truist banker to see how Truist can help you and your business.

Find out more.

Learn more about your SBA financing options Go to SBA loans website, and take the next steps in moving your business to greater financial success.