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How to Get a Small Business Loan

June 23, 2012 By 7 Comments

If you’ve been following along with the young entrepreneurs that we’ve interviewed you know that getting a business started takes work. And it also takes money. When we spoke to the owner of Raw Denim, she mentioned using her own savings and money from investors to get started, but a small business loan is also a way to raise funding for your business.

how to get a small business loan

The Small Business Administration is a U.S. organization that administers programs and provides support for small business owners. Their services are centered around 3 C’s.

  • CAPITAL: They work with about 5,000 banks to provide SBA loans to deserving small businesses.
  • CONTRACTS: They work to ensure that 23% of federal contract dollars go to small businesses.
  • COUNSELING: They have 14,000 SBA-affiliated counselors for small business guidance.

We’re going to talk about the first C, Capital. If you have trouble qualifying for a traditional bank loan, you may be able to get financing from an SBA program.

The first thing you’ll need to do it visit a local bank or financial institution that participates in an SBA program. Make sure you have met all of the requirements listed on the SBA Loan application checklist. There are about 14 points to cover including a personal statement, projected financial statements, and personal tax returns for the past three years.

The Small Business Administration does not set the interest rate on the loan since that is determined and negotiated between the lender and the borrower.

Once you have the SBA loan and all of your operating expenses covered, you will be surprised at how much you will need to cover day to day expenses. There are several ways to finance everyday expenses and to keep track of your business expenses for tax purposes. One of the best ways to do this is to keep a small business credit card on you for these expenses. That way you can keep all of your business expenses in one place and easily pay them off each month.

For an alternative to expensive bank loans make sure to check out invoice discounting from Hitachi Capital. To celebrate the launch of Inspired Cashfow, enter the SME competition for a chance to win £1M of funding for your company

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About LaTisha Styles

"Money is a tool. Use it to get where you want, but don't let it control you."

Writer, runner, competitive as heck. Love to laugh and make others laugh. Focused on helping you build success and stay motivated along the way. Start investing now and let’s build wealth together.

  • http://BasicBlogTips.com Ileane

    Hi LaTisha, these are some great tips. This is the first time I heard of the micro loan card for small business but is sounds like a great way to keep track of spending and how much things cost. Thanks!

  • http://onecentatatime.com/ SB @ One Cent At A Time

    Good post Latisha, someone sure would get benefit out of the program. There are national programs to encourage entrepreneurship you can apply as well.

    • http://youngadultfinances.com LaTisha Styles

      Yes, the country needs more small business owners to hire and that will help pull us out of this stagnant economy.

  • http://www.sooverthis.com Andrea @SoOverThis

    Thanks for this info! A lot of people have asked me why I never opened a private practice since I’m a licensed therapist, and it’s mainly because I knew I’d have trouble qualifying for a business loan because of my bad credit.

    I still don’t have any plans to open a brick and mortar business anytime soon, but it’s nice to know there are other options if I ever decide to jump back into my former career.

    • http://youngadultfinances.com LaTisha Styles

      I’m glad it could help! There are many options rather than the traditional ones that most people know about and it may even be easier to qualify. Also, as long as you have a solid business plan, you could also try direct investors.

  • http://www.youngfamilyfinance.com Wayne @ Young Family Finance

    I may need to look into that SBA loan for my wife. She is starting up a private teaching business, and it is just too hard to afford everything out of pocket. Thank you for the information! Have you used an SBA yourself, or do you know someone who has?

    • http://youngadultfinances.com LaTisha Styles

      I haven’t used an SBA loan mostly because I try to start low cost businesses but I have several friends who have gone through the process. Let me see if I can get a user experience and I will do an interview to go along with this post.