What Lenders Look for When Approving SBA Loans

What Lenders Look for When Approving SBA Loans

When it comes to Small Business Administration (SBA) loan approvals, lenders typically look at a variety of criteria. These criteria can range from the number and quality of employees, to the financial strength of the business, to the creditworthiness of its owners. Here are some key factors that lenders consider when evaluating an SBA loan application:


  1. Financial Strength

Lenders look for evidence that a small business is capable of sustaining itself in the long-term. This includes assessing the financial statements, such as balance sheets and income statements, to measure liquidity, profitability, and cash flow.


  1. Business Plan

A comprehensive business plan can provide lenders with an understanding of the company’s strategy, goals, and objectives. The plan should include market research, an analysis of competitors and potential customers, as well as a financial forecast demonstrating that the borrower can meet loan repayments.


  1. Equity Contribution

To be approved for an SBA loan, small business owners are usually expected to contribute some level of equity to the loan. This demonstrates their commitment to the business as well as providing lenders with a level of assurance that they will recoup some of their investment in the event of default.


  1. Collateral

Small businesses should present lenders with an inventory of assets they can use as collateral for the loan, such as property or equipment. This reduces the risk of default and provides lenders with an assurance that they can recoup some of their losses if the loan is not repaid.


  1. Creditworthiness

Lenders will assess an applicant’s credit score to determine whether or not they have a good history of repaying debts on time. A strong credit score indicates that a business owner has a good track record of handling finances responsibly and is likely to be approved for the loan.


  1. Management Experience

SBA loans typically require small business owners to demonstrate their ability to manage a business successfully. This includes having relevant experience in running businesses as well as evidence of successful management strategies they may have employed in the past.


By taking the time to understand these criteria and gathering the necessary materials, small business owners can increase their chances of success when applying for an SBA loan. Contact Brightview Commercial Capital today to get an SBA loan for your business.