Government small business loan funders provide businesses with much needed capital financing through the SBA 7(a) loan program. We actually make the loans and the SBA guarantees them. It is important to understand that the SBA has no funds for direct lending or grants.
To qualify, you should meet these criteria:
- You must have a stake in the business. The SBA wants to know that if you apply for credit, you have invested in your own business. In the SBA’s view,
if you have put your own money into your venture, then you are much more likely to push harder for the success of the business.
- You should have a strong business plan. Like banks and other financial institutions, the SBA requires the submission of a business plan. The SBA wants to see detailed plans on how your business can make money. More importantly, they want to know how you will be able to repay the loan and whether your business can earn enough to at least cover the monthly payments.
- You need a good personal credit rating. The credit history serves as a person’s gauge for credit worthiness. The borrower’s track record in paying their bills will form an important component in the loan application process.