5 Signs your Small Business is Ready to Apply for an SBA loan

A functioning business can almost always use a bit of extra cash if it can come across some. But, what are you willing to do if your business needs financing? You might not need financing at the moment and things might seem comfortable. But, when you don’t need urgent funding is a great time to explore your SBA loan or credit options.

You might have planned for expansion and you may have a desire to take your business to new heights. We’re sure that you’d need funding to do any of that.

In this article, we’ll discuss signs and scenarios that indicate that you’re ready to apply for small business financing or SBA loans. If you recognize any of them, it might be an indication for you that it’s the right time to look for business financing.

1. You have a wonderful credit score

It takes a lot of time and a willful determination to build your credit history, diversifying the types of credit you use, and making debt payments on time. If your credit score is in the Excellent range (660 or more), it might be a great time to apply for an SBA loan or line of credit.

If you’re recovering from hard credit inquiries, chances are that your credit score has taken a hit as a result. In such a situation, you should wait until you’ve recovered from any such dips before applying for a new SBA loan.

After bouncing back, your strong credit history can help you gain access to more affordable loans or lines of credit with better rates and terms. This strong credit history can also help you upgrade to even better financing options in the future.

2. You need to expand your office space

SBA loans can help you expand the office space of your business if the existing space is not enough anymore. Today, many lenders offer SBA-backed loans formulated for this purpose like commercial real estate loans.

You can use a real estate loan to purchase any new business-related property. You can also utilize SBA loans to improve your property or perform construction on a piece of real estate.

Many traditional lenders also offer real estate loans. But, as a small business owner, you should remember that you have access to other better options. For example, SBA loans are popular among business owners due to their affordable interest rates.

3. You’re facing excessive demand

Expanding your business doesn’t always mean increasing your office size or adding new locations. Times might come when you’ll find yourself with too many orders and too little inventory or too few hands. You can use SBA loans to fund these kinds of expansions as well.

If all you need is new equipment to help meet the demand, you should consider equipment financing. It allows you to get small loans equivalent to the cost of your new equipment with a speedy approval process. In this type of loan, the lender defines the loan term using the expected life of the equipment. You have to use the equipment itself as collateral to secure the loan. If getting an equipment loan seems to be too much to you, you can even consider a line of credit instead.

4. You don’t need it urgently

The ideal time to apply for a small business loan is when you don’t urgently need one. If you own a seasonal business then the right time to apply for a loan is during the busy season.
It’s easy to lose sight of the long-term when your business is going through a busy season. But you must plan your off-season beforehand because it’ll help you get by easily and also you’ll have more financing options!

If you wait for the off-season to be over, your expenses are likely to be highest while your cash reserve the lowest. That’s not an ideal place to be in. The better option is to approach lenders when you’ve just come off a profitable period. This is because they’re more likely to take a favorable view of your business since you’ve just reported great profits.

You can show the lenders the peculiarities of your seasonal industry using documents like cash flow statements and expense forecast statements.

5. You want to grab an opportunity

If you want to seize a once-in-a-lifetime opportunity, chances are that you’ll need more resources than you have. In such a situation, a small business SBA loan or a line of credit can be of great help.

Your lenders will likely want to know everything about the new opportunity and how it’ll strengthen your business. So, get all the supporting documents ready because the lender can ask for any of them to verify your claim. You’ll also have to give them a set timeline as to how and when this opportunity will start generating returns.

Got any questions? Let us know in the comments below or write to us and we’ll get back to you at the earliest!