How difficult is it to get a SBA loan to fund your concept?

If you have written documents for a presentation and collateral, “start up” loans are done on a regular basis by SBA Lenders.

  1. A “concept” needs to have these written presenting documents to be “real”:
    a) Business Plan
    b) Three Years of Projections with underlying Assumptions for how you came up with the Projections
    c) In many cases a “Market & Feasibility Study” by a specialist in the field of your “concept” will need to be produced
  2. You will need to know the total amount the “start up” will cost including the dollar amount needed to have the business running until revenue pays the bills
  3. You will need to pledge collateral for 25% to 50% of the loan amount. This is usually in real estate equity, tangible property equity or in some cases using stocks, bonds, cd’s or cash in savings accounts.
  4. The SBA Lender will usually require that you have 20% of the project cost given as a “down payment” at closing. This means you will need to show 20% of the project cost in available cash
    a) This available cash can come from anyone as a gift
    b) You and/or the gifting party will need to show the funds were in an account for three months prior to closing
  5. You will need to show you have the requisite managerial experience in the “concept’s” field of activity
  6. You will be requested to provide three years of personal tax returns, bank statements, personal financial statement, etc for a full documentation and full underwriting of the loan.