According to the US Government’s SBA (Small Business Administration) website, the SBA “provides a number of financial assistance programs for small businesses that have been specifically designed to meet key financing needs, including debt financing, surety bonds, and equity financing.”
Given this rather noble mandate, you might envision walking into a bank, informing the small business loan officer that you’d like to apply for one of these wonderful “financial assistance programs”, and in a reasonably short period of time find yourself with the capital you need to drive your small business onward and upward.
However, as countless small business owners around the country have discovered, the scenario is playing out quite differently than they expected. Instead of moving forward through the process, they’re essentially being told right from the beginning that there is no chance of approval.
If you’re considering applying for a SBA loan, then while we certainly don’t mean to be the bearers of bad news, here are 3 factors that will almost certainly crush your SBA loan dreams:
1. You’re a start-up.
In many parts of the country and around the world, being a start-up is a good thing; in fact, it’s exciting, progressive, and innovative. Indeed, there are many stories about high-powered enterprise executives who quit their 7-figure salary a year jobs, so that they could launch their very own start-up.
However, when it comes to SBA loans, “start-up” is a terrifying (hyphenated) word. If your business hasn’t been around for at least a couple of years, then you’ll almost certainly get the thumbs down.
2. You have a low credit score.
Your credit score is in no way directly related to the viability of your business, your potential to turn a profit, or any of the other factors that will ultimately determine your business success.
However, the SBA doesn’t care. If your credit score is low – and for the SBA, that’s usually anything less than 600 – then you can basically forget about your application being approved.
3. Lack of Collateral
If you don’t have the kind of collateral that the banks want, or you DO have it and don’t want to use it to secure the loan, then…well, you know where this story is going. Your SBA loan application won’t even get off the ground.
“But Wait, there’s More…”
Let’s assume that you aren’t a start-up (as defined by SBA loan officers who may have never worked in a start-up for a day in their life – but that’s another matter!), and that you also have flawless credit and an abundance of collateral. Does this mean that you can expect to receive your SBA loan funds in the near future? NO!
Even if you’re the ideal SBA loan candidate, you should expect to wait several months and even as long as half a year before your application is approved and the funds are available. In fact, it’s not uncommon for a single SBA loan application to snake its way through more than 30 loan officers!
A Better Alternative
At Mulligan Funding, just like you we live and work in the “real world”. We don’t depend on government allocated funds to run our operations. We survive and grow because we provide transparent loans to REAL SMALL BUSINESSES. We can’t get by on having lofty mission and vision statements. If we don’t fulfill our promises and support our customers, we don’t exist. It’s really that simple.
If you’re not interested in jumping through SBA loan hoops – only to find that instead of a pot of gold at the end of the rainbow, there’s a bureaucrat’s “rejection” stamp – then call Mulligan Funding at 855-326-3564 to discuss your financing options today!