Loans facilitated by the Small Business Administration (SBA) can be a huge help to entrepreneurs and businesses, and manufacturing companies are no exception. This post provides several tips that can help manufacturing companies more easily obtain SBA loans.
Tip 1: Have the Right Documents on Hand
Lenders are going to be very inquisitive about your business’s financial history. To quench their thirst for information, you should have documents such as bank statements, financial reports, tax returns, and your company’s business plan on hand.
Tip 2: Be Aware of Your Credit, Cash Flow, and Collateral
According to this guide from the SBA’s Joe McClure, potential lenders will be highly interested in your business’s credit, cash flow, and collateral. Among other factors, your business’s credit reflects how frequently or infrequently it has paid its past bills on time. Cash flow reflects whether or not your business is in good financial straits; the more positive your business’s cash flow, the more attractive your business will be to lenders. Collateral refers to the assets your business can potentially use to secure a loan.
If any of these areas are shaky, take any steps you can to address them and/or be ready to explain the situation to potential lenders.
Tip 3: Be Specific
Specificity will be a huge help in your application. For example, if your company wants to use the funds to purchase new equipment, then provide a breakdown of the cost of the equipment itself, the price of installation, and any other expenses that will go into getting the equipment up and running. This will show the lender that you have a focused, planned-out purpose for the money.
Tip 4: Exhibit Patience
Before extending financing to manufacturing companies, lenders do their homework thoroughly. Be ready to make your case for your business over an extended period of time, and remain patient. This will help potential lenders become more at ease with—and supportive of—your business.
If you’d like to keep learning about financing options and other aspects of the business world, check out Simplicity Capital Finance’s additional blog posts.
