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Starting your own small business with an SBA loan

By Edited Nov 13, 2013 0 0

Everyone knows that to start a business and make money, you must invest money. Many people have great ideas for starting their own small business, but just don't have the resources to get it off the ground. This is the main reason that these people with great ideas never get anything going, they just don't have the money to invest and start their dream business.

Thankfully in 1953 the Small Business Administration Loans were created by Congress. The program was created to help your average American start their own business. Since its creation, the SBA has helped thousands of Americans fulfill their dreams by helping them with the start up costs in opening their own business. If you need financial help to get your own business going, the SBA can definitely help you out. Besides the financial assistance they offer, they will even give you management assistance if needed, which is very important for your business if you have had no prior business experience. Do not mistaken the SBA with any of your general banks and lending institutions out there.

The main reason that the SBA was created was specifically for those who would not qualify for your traditional loans. For this reason, a person must first go and apply for a traditional loan from a traditional lending institution. When you are turned down for the loan, this will prove to the SBA that you can not qualify for a traditional loan. Sometimes it is best to apply for a loan from two different banks to further prove to the SBA that you just can not obtain a loan from anyone.

When you are refused for the loan from the bank, you can ask the banker if they are interested in working with the SBA for you to get your loan. If they are, they will work directly with the SBA and go over your loan application with them. They will discuss with the SBA about the SBA's loan guarantee plan, which pretty much will protect the bank from any loss on the loan if you were to default on it. This of course is a big plus to you because the bank will want to make the loan to you since the SBA is pretty much offering the bank a no risk offer.

Most banks and other financial institutions will be interested in the SBA's loan guarantee program. If for some reason they are not, you will have to deal with the SBA directly yourself. To do so, you will have to contact the SBA by calling their hotline at 1-800-827-5722. All you have to do is tell them that you are interested in obtaining a SBA loan and need more information on how the process works. The SBA representative you talk to will give you all of the information that you will need and will tell you where your local SBA office is.

You are going to have to fill out an SBA loan application. Besides the general information about yourself, part of the application will give the SBA some insight about your business such as what revenue you expect to bring in with your business, and what expenses you anticipate you will have. If you have any problems filling out your SBA loan application, they are always more than willing to help you out. If you are not sure about something, it is best to ask for help because you will not want your application to have any mistakes on it. If you have mistakes on it, you may delay your application getting approved and they will just have to send it back to you to correct because of mistakes on it.

When the SBA reviews your application, they will consider what your chances are of succeeding with your business plan. They will also look at other things to consider when making their decision such as if this business will be your main source of income. The way they look at it is that if this business will be your sole income provider, you will most probably work harder with it and give it 100% effort since you and your families livelihood depends on the business. They also like it if you are going to be 100% involved with the business and manage it day by day instead of outsourcing the work to someone else. Basically, the more involved you are going to be in the business the better.

Many people have gotten their business started by obtaining an SBA loan. Do not ever feel unconfident about you not being accepted for an SBA loan. Remember that the Small Business Administration is well prepared to take greater risk than traditional lenders for you. They understand that you may not have the greatest credit report, or have much business experience, but they are still there to help you obtain that loan to start your dream business.

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