Writing A Business Plan:
The SBA Application Loan Process

The SBA application process is, at best, daunting. The best approach: Tackle it with a vengeance.

The SBA Paperwork

No one can ever accuse the government of overlooking paperwork. As great as the Small Business Administration program is, the SBA application paperwork is out of control.  
But, thousands of businesses have muddled their way through it, so perhaps you can too.

Click here for a copy of the application for an SBA loan -- it is #4 on the list. This application is IN ADDITION to any business plan you may submit. The application is pretty cold -- it is your business plan that will warm the souls of your lender.

There could be other forms that you need as well. Check the list of forms on the link above, as well as the checklist in #1.

If you are seeking minority status, there are other forms you will need to fill out. Click here for the minority business forms.

The SBA application looks about 6 inches tall, all in tiny little print. Actually, it's not that bad -- it just seems like it.

 Although there are millions upon millions of dollars in the SBA coffers, they aren't giving it away. In fact, it usually feels like we have to jump through hoops to get to the money at all.
One of the most important things to remember is: Your SBA bank HAS to make loans. It's the only way the bank can make money. It absolutely has to lend that money to small businesses, businesses just like yours.

So why all the *(^%$#!* paperwork?

Because it's a government-run program. And because the bank has shareholders that it must report to.

John Hanlon, assistant vice president for commercial and SBA lending at Community Bank of Mantee (Florida) took the opportunity of an interview to encourage small business owners.

Among his observations:

1. There's not nearly as much paperwork as business owners fear.

2. He doesn't like making business loans under $100,000, and will look to other sources, such as a home equity loan, in the lower ranges. A business loan for $20,000 takes nearly as much paperwork and follow up as a business loan for $200,000, so the bank is really better off making the $200,000 loan.

3. After an initial interview, he will ask you to come back with preliminary, written exhibits, including a brief synopsis about your company and details about how you'll spend the bank's money.

4. For start up businesses, he will ask for projected operating expenses.

5. He looks for a 1.2 debt service ratio by six months to a year. That means 20% of cash flow will be left over for unexpected contingencies.

6. He will look for you to put 15% to 30% of your own cash into the project.
Above all, I liked this piece of advice: "Don't be intimidated. The banks want to do deals."

Hanlon's comments could be echoed in banks throughout the country. So go in prepared, and take your best shot. The money is there.

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