There are several small business administration (SBA) loan requirements to obtain COVID-19 relief. SBA loans are drafted in an agreement between banking lenders and the agency. The administration’s loan programs cover some of the lender’s risk by guaranteeing a portion of the loan amount. In turn, lenders offer more payment term flexibility and lower various interest rates to small businesses. As a small business owner, you can navigate your company through these uncertain times. Here are the most important SBA loan requirements to obtain COVID-19 relief.
For-Profit U.S. Business In Right Industry
To obtain COVID-19 relief, have a for-profit U.S. business in the right industry. Confirm that your business is officially registered, doing business in the U.S. and legally operating. Of course, your business must fit into the SBA approved size. Additionally, you must provide the reason you need a loan. Include a specific purpose and a history of attempted alternative financing. Finally, supply your business history and financial history so lenders can determine your eligibility. Certainly, be a for-profit U.S. business in the right industry to be eligible for a SBA loan to obtain COVID-19 relief.
Improve Your Credit Score
Additionally, clean up your credit score fast to obtain COVID-19 relief. Retrieve a copy of your credit report before applying for a loan. Verify that all information is included such as types of accounts, payment history and credit score. The SBA will examine your report to determine your ability to pay back the loan. They require that your credit score is 670 or above. Additionally, they search for delinquent payments on your credit report. Therefore, you must pay your bills on time to avoid being denied a loan. Surely, you are more eligible for a loan if you improve your credit score.
Proven Reliability And History
Next, prove that your business history and income are reliable to receive COVID-19 relief. You are more likely to receive a loan if you have a two year old business with a dependable history. Your business must meet the SBA’s “good character” condition. This is based on your track record of managing resources and daily business affairs. Furthermore, the SBA requires that your business is free from current bankruptcies, foreclosure or tax liens. Additionally, you should be able to make a 10% down payment if the funds are used to purchase a business, commercial real estate or business-related equipment. Moreover, your business must have a sufficient income. Your income must meet debt obligations and pay off the loan over time. Of course, you need to prove that your business is reliable to obtain COVID-19 relief.
To meet eligibility, most SBA loans require collateral to obtain COVID-19 relief. Generally, lenders insist on some form of collateral if the loan is $20,000 or more. You can still apply with little or no collateral. Typically, collateral comes in different forms. SBA loan collateral includes business assets, estate assets or personal assets. Additionally, accounts receivable or inventory can be collateral. Of course, the type and value of collateral varies on the breakdown of the company’s equity. Check that you have a stronger overall business health, cash flow, or personal and business credit profile. This could qualify you for a higher loan than you would receive with a traditional collateral loan. Collateral is a SBA requirement to obtain COVID-19 relief.
Proper Paperwork Submission
Finally, submit the proper paperwork to obtain COVID-19 relief. There are many forms to include in your loan application. First, include a borrower information form. Next, include a personal background and financial statement. This consists of SBA Form 912 and Form 413. Of course, include a business financial statement. This consists of year-end/interim profit and loss (P&L) statements, year-end/interim balance sheets, reconciliation of net worth, and projected financial statements. Additionally include, business certificates/licenses, loan application history and income tax returns. Finally, verify that you attach proper resume, business overview, history, and lease paperwork. Submit the proper paperwork to determine if you qualify for COVID-19 relief.
Of course, there are many SBA loan requirements to obtain COVID-19 relief. First, verify that your business is U.S. based and the SBA approved size to gain a potential loan. Additionally, improve your credit score for higher loan eligibility. Of course, you need to prove that your business has a reliable history of managing resources, finances and daily business affairs. Certainly, confirm that you have some form of collateral if you need a loan over $20,000. Finally, submit the proper paperwork for a simple loan qualification status. Certainly, these are the top SBA loan requirements for COVID-19 relief.