Starting your own business is simple. Just put on your best clothes, head to the bank, and obtain your cash, right? Get an SBA (U.S. Small Business Association) loan or a bank loan and walk out one huge, important step closer to reaching your dream of owning a business. Sounds like a piece of cake, right?
Wrong. In reality, getting a bank loan or SBA loan can be pretty tricky, costly, and time-consuming. It’s not something that can be done in a day, a week, or even a month. Serious entrepreneurs should set aside a substantial amount of time to plan. In fact, some loans take years to obtain. Getting their hands on an adequately-sized chunk of change is why most people end their dream right at the door of their local bank.
For starters, a loan typically takes anywhere between two to three months to be processed. Another thing to consider is your credit score; banks ask for absolutely perfect credit. If you have made so much as a small financial mistake or two in the past, now might be the time it comes back to haunt you. To prevent this, settle up with any companies you owe money to before applying for your loan. Of course, doing so might cost thousands of dollars. You may want to plan ahead accordingly. If that wasn’t a huge enough request, the bank also needs proof of at least two years of business income.
The U.S. Small Business Association insists that anyone applying for a loan have perfect credit or know of a willing cosigner who does. So if you haven’t talked to mom and dad in a while, why not call and ask for a gigantic favor? There’s nothing like asking the parents for help, right? While the SBA does not require two years of business income, they do require that you own some form of collateral, such as a house or land. For many adults in this economy the request seems impossible to fulfill, especially for entrepreneurs living in large, urban cities.
With all of that aside, remember as an applicant it is your job to sell your business to the bank or SBA. It is imperative for you to convince them that you will easily and quickly be able to pay off your loan with earnings from the business you intent to start. You can hire someone to help you come up with a compelling argument, or you can tap into your creative side and come up with something yourself.
If you do manage to get a loan, it can completely change the course of your business life. It opens some pretty huge doors and allows you to live your dream. So even though the road to a small business loan may seem daunting, it can really pay off. If there’s no way you could ever qualify for a loan of any kind, don’t fret. With lots of hard work, diligence, and passion for your business, you can still make things work. The best part is knowing you did it all yourself.