How to Get an SBA Loan
Food Franchise Finance
Do you dream of opening your own restaurant but lack the capital to make your dream a reality? An SBA Loan may be just what you need to finally open your restaurant. If you're going to apply for an SBA Loan (Small Business Administration) you need to know what is required and the procedure that you need to follow to be approved.
Who is eligible for an SBA Loan? If you live in the United States and have a small business you will most likely qualify for a Small Business Administration Loan. Some of the requirements that you need to meet include:
You must have a certain amount of owner equity.
You must have some money that is invested.
You need to have some amount of personal assets.
Any, or all, of the above requirements need to be in place for you to qualify for an SBA. Before you apply for an SBA Loan there are some things that you should put together so that you're as prepared as possible for the procedure.
When the lender is ready to make a decision about whether or not you qualify for the SBA loan there are some things that they will take into consideration. Some of the considerations that lenders will take into account include:
Will you be able to repay the loan from the profits that you earn from your business?
Do you have any previous experience in the food industry business?
Do you already have credit and how good is your credit rating?
Are you investing your own money in your business?
What type of collateral do you have?
Do you have a good, solid character?
There are several different types of SBA Loans available. If you're looking for funding for your restaurant business your best choice is the SBA 7(a) Term Loan as outlined by Wells Fargo Bank:
"This type of loan can be used for a variety of business purposes. A start-up or existing business can use the money to finance purchases of land, buildings, equipment, furniture or inventory, as well as cover accounts payable and other short-term working-capital needs.
Applicants' eligibility is based on the ability to repay the loan from cash flow, as well as collateral, management capability and owner's equity contribution.
How to get one
Through a conventional commercial lender such as Wells Fargo Bank. Borrowers typically make a down payment or show equity ownership of anywhere from 15% to 35% of the total loan amount borrowed. The lender then finances the remainder and in return receives a guarantee from the government on a portion of the loan - currently about 75% to 85% up to $1.5 million, depending on the loan's size."
Applying for an SBA Loan is easy but if you're having problems, or are concerned about the complexity of the application, you can talk to a business consultant to get the help that you need. The important thing to remember is that you answer all questions honestly and to the best of your ability. The more accurate your application is the better chance you have of getting a fast response.
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