Step by step guide – SBA Microloan Process

Your Guide To A Successful SBA Microloan Process

An SBA Microloan is a loan of up to $50,000 from an intermediary nonprofit to the owner of a small business or startup. The money originates from the SBA, which initially lends the money at a discounted rate to the intermediary.

SBA Microloans are the most accessible types of SBA loans, and they’re a great option for aspiring entrepreneurs with a plan of action. Many of these loans are SBA loans for women, minorities, veterans, low-income, or from other represented groups, but they are available to any for-profit small business (non-profit child care centers are also eligible for Microloans). SBA microloans are often synonymous with SBA startup loans as well.

Other than establishing some parameters around interest rates and eligible loan uses, the SBA generally takes a backseat on these SBA loans (in contrast to some other SBA programs, where the SBA plays a more active role). The SBA leaves a lot of discretion to Intermediary SBA lenders to decide the terms and which borrowers should receive Microloans. The SBA does not even review the loan applications for creditworthiness.

The absolute first procedure and Most Important part of the SBA Microloan Program is to complete the Business Plan. Make sure that you follow the instructions given on creating a business plan. Think of your business plan as an opportunity to showcase your business to the lender. A clear understanding of your business’s products and services and your financial standing will go a long way towards that. If you do not have a SBA approved business plan, we suggest purchasing it from us. If you decide to purchase from us you will fill out the Business Plan Questionnaire in it’s entirety and email back to us so we can write your business plan.
You must also produce or estimate future sales and expenses, if you are not able to do this you may use the numbers given

1. Business Plan – The absolute first procedure and Most Important part of the SBA Microloan Program is to complete the Business Plan. Make sure that you follow the instructions given on creating a business plan. Think of your business plan as an opportunity to showcase your business to the lender. A clear understanding of your business’s products and services and your financial standing will go a long way towards that. If you do not have a SBA approved business plan, we suggest purchasing it from us. If you decide to purchase from us you will fill out the Business Plan Questionnaire in it’s entirety and email back to us so we can write your business plan.
   You must also produce or estimate future sales and expenses, if you are not able to do this you may use the numbers given in the custom Business Plan that came with the package.**You simply cannot find another entity to create a fully expandable SBA custom business plan cheaper than SBA50K.COM, please consider us for the business plan. We know exactly what these intermediaries look for and the format they want.

   Why do you need a business plan?

   You may be wondering why you need a plan in the first place. After all, you have a clear idea in your mind about what you want to achieve. You know the market, you have the necessary skills. So why do you need a plan?

   There are many good reasons. Here are just a few of them:

   • To clarify your ideas
   • Writing something down gives it structure and substance. Your ideas will be clearer on paper than in your head.
   • To discover and solve problems
   • The business idea you have in mind may have some holes – you might not have covered everything. This will become much more apparent when your words are on the page.
   • To get feedback from others
   • A properly written business plan can be shared with trusted people to get their advice.
   • As a formal document
   • Banks, investors, accountants and lawyers will want proof that you’re serious about your business. A written plan will provide that proof.
   • To guide you as your business grows
   • A good business plan will keep you on track and focused, even as day-to-day work becomes a distraction.
2. Once the Business Plan is complete, you will need to gather some past tax returns. Please have at least 3 years prior Tax Returns copied, along with a copy of a current pay stub. If you do not have the past 3 years of Tax Returns make sure you explain why you do not have them, again be honest and tell the absolute truth. (The MicroLoan is typically Not for someone with Stellar Credit)
3. ***– Purchase Orders –*** “VERY IMPORTANT”
   Everything you need to start your business (ie. Computers, Furniture, Inventory, Machinery, Vehicle, etc.) You need to get a purchase order for. This step requires some legwork and is THE MOST IMPORTANT STEP but once completed you will see that it will make the application process with the intermediary very smooth. The key to this step is that once you have all the purchase orders done they can be PLEDGED AS ASSETS AND USED AS COLLATERAL (I bet you did not know this little secret)! So the more purchase orders you can get for your business the more you can borrow against (up to 50k). (Very Important)SBA Microloans generally require collateral. Collateral assures the lender that they will be able to get their money back if you default on the loan. Business assets (e.g. equipment, accounts receivables, real estate, etc.) can serve as collateral, as can personal assets (e.g. your car, home, personal property, etc.). Any assets that you purchase using the loan proceeds will become collateral.
4. Application – The application process is rather straightforward, please answer all the questions truthfully and remember with this type of loan all things are explainable. If there is a lapse of employment just state it. If you paid a mortgage payment late, explain why and again be truthful. If you paid a credit card bill late, again just explain the circumstances. If you have any questions filling out the MicroLoan Application simply email us your question. We are here to help.
5. Remember, answer any questions “To The Point” do not over answer any question, keep it simple. Answer exactly the question do not elaborate,
6. Once you have completed all of the steps above, make a copy of your whole package. Next you must submit the whole package to the intermediary via Certified Mail with Return Receipt, and save the receipts from the Post Office.
7. You should hear from the intermediary within 2 weeks, and at that time they might ask you to come down for an interview (it’s fine, some intermediaries make this a step in the process)
8. Once you’re approved, get down to business by starting your business!