Prepare Now for an SBA Emergency Loan
March 7, 2009 by Jean Murray
Filed under Business
Congress has appropriated $255 billion to the Small Business Administration for emergency loans to small businesses. While the SBA is preparing its guidelines, it’s time for you to get ready, if you want one of these loans. Certainly the SBA will attempt to “fast track” the loans, but the competition will be fierce, and you must be ready with all your paperwork in order. I’m not a banker, but I know what banks traditionally require for small business loans, so if you want your request to be taken seriously, here is what you need:
Excellent Credit. If you have business credit that is outstanding, great. Or maybe your personal credit is excellent. Banks are looking carefully at credit, and denying loans to those individuals and businesses which, in the past, might have been accepted. You don’t have time now to repair your credit rating, so just present what you have. If you don’t have excellent credit, you may need a co-signer or investor to help. Banks are not going to slack off on the requirements now; that’s what got them into trouble in the first place.
A Great Business Plan. The SBA and banks want to see a business plan to show how you will spend your loan. Show how you will use the money (be specific) and how you will pay it back. Make sure you have correctly estimated the costs of items you will need and be able to show how the loan will improve your business’s financial situation. Include a one-page Executive Summary so the bank can see at a glance exactly how much you want, what you want it for, and how you will pay it back.
Fantastic Financials. Your financial statements (cash flow and P&L for at least 3 years) should be impeccable. No holes, no mistakes. Check to see that all the numbers tie together; nothing tanks a bank proposal faster than numbers in one place that don’t tie in to numbers in another. Go over both the business plan and the financial statements with a fine-tooth comb, and have someone double check everything.
A Riveting Presentation. Brush up on your presentation skills. Lead with the basics of your request and then move quickly to explain your business plan and financial statements. Keep it simple and clear. Unless you are an expert at PowerPoint, don’t bother being fancy. Just be sure you know the answers to all the questions your banker might ask, and practice, practice, practice.
I’ll keep you posted on when the SBA guidelines are released; until then, get busy.
Image source: Poolie on Flickr
I thought the President’s SBA loans for Small Businesses in need of help & it was specifically for us who could not get a bank loan because of our recession credit.
This article seems a bit ridiculous for me. First of all, this recession really started well over a year ago. Contractors, for example, went from
being extremely busy to almost nothing. As a result, revenues began to plummet and along with that their ability to cover much of their debts. As in musical chairs- suddenly, and I mean suddenly- the music stopped.
If this is an “emergency” loan, how can credit be expected to be excellent and their business to be profitable- at least for the past year? You’ve got to be kidding me. Excellent credit? A great P&L? Doesn’t sound like a business that is in trouble or needs help to me.
Hopefully, this is misinformation. Otherwise, this ARC stabilization is pure baloney.
Does GM meet these requirements? These small businesses need help right now, today in fact and I doubt that their credit score and P&L’s are in great shape! I would think they are in poor shape, probably like GM’s. And, can you still get a loan if your business plan is poor or at least some money with an allowance in time to re-submit a plan as GM did? Please, give the small business person a break!