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Growing Your Small Business Through SBA Lending

While other lending options exist for small businesses to raise capital, there are limitations that could impact your overall business plan and vision when it comes to strategies such as private equity, borrowing from friends or family, crowdfunding or bringing on additional business partners.

Growing your small business
One solution to consider is working with your bank to apply for an SBA loan. Working directly with your bank can also provide you with access to the products, services and expertise that help you achieve the goals you have set for yourself and your business.

Depending on the reason you need funding (i.e., adding a new location, acquiring a business, buying out a partner, buying a building, a construction project, etc.), there are different types of SBA loans available. SBA loans often offer benefits to you as a borrower that other forms of financing may not provide, including:

  • Longer, more flexible repayment terms.
  • Lower down payments.
  • Different interest rate options to suit your needs.
When you start the loan application process, you should be prepared for a thorough examination of your financial background and current or proposed operations. The more information you organize upfront, and the more familiar you are with the different elements required to secure an SBA loan, the smoother the process may be. Keep the following considerations in mind:

Business Plan

Having a detailed business plan that meticulously demonstrates how you will establish and grow your business is critical, especially if you are buying or starting up a business.


Your company’s financial statements and tax returns from the previous three years will be reviewed, as will your personal financials as the business owner. If you are buying or starting a business, your lender will want to know about your previous financial experience in owning or managing a business to further support your loan application.

If you face a situation where a lender may deny a loan due to limitations in your financial background, bringing on an experienced partner could make a difference. Remember this as you compile your holistic business strategy.


The loan purpose and your lender’s requirements will determine how much and what type of collateral is necessary to secure the loan. Both business assets (equipment, real estate, inventory) and personal assets (real estate or marketable securities) may be required depending on the loan amount.

An SBA loan also typically requires that the borrower carries a life insurance policy that would cover any collateral shortfalls in the event of death before the loan is repaid.

With the right plan and an SBA loan to help support your company’s goals, your business has an opportunity to grow.

Then, with an established track record of financial success, your business may be in position to pursue more conventional forms of financing that were previously unavailable.

Remember that the first, and perhaps most important, step is talking with your banker or trusted financial advisor early in the process.

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