But before you worry too much about being ineligible for a grant, look to the SBA Loan Programs for your business. There are three programs included on the SBA website, including the basic 7(a) Loan Program, which assists eligible borrowers with starting and expanding their small businesses. Another option is the Microloan Program, which provides short-term loans for start-up concerns like purchasing inventory and working capital, and on the flip side of the coin, the CDC/504 Loan Program offers long-term business financing for major assets like buildings and land acquisition.
Once you determing the loan program that best fits suits the needs of you and your business, keep these tips in mind as you begin the application process.
• Be as organized as possible. I don’t just mean ensuring that you have your business financial statements and loan application history handy. Make sure that you have a professional and formalized presence for your business established, forming a corporation or LLC. By having a corporation or LLC, you can set your personal assets apart from your business, ensuring that there is no co-mingling of funds and that the business is running as a stand-alone, independent entity.
If you already have an established corporation or LLC in place, make sure that all of your business’ annual filings and minutes/bylaws are up to date. If the books and records of the organization are going to be reviewed in anticipation of funding, it’s critically important to have all of your documents in proper order.
• Demonstrate your business ownership. Make sure that the business bylaws and operating agreement accurately state that your own the business for which you are seeking funding. Be sure to make clear the percentage ownership of the business and the roles of the parties involved.
• Draft a detailed business plan. Before you can fill out a SBA application of any sort, you need to have a business plan in place. Business plans typically project about three to five years into the future and outline the steps you plan on taking to maintain or grow your firm’s revenue. Be sure that you’ve established a strategy for how to meet your goals and clearly stated the amount of funding you will need in order to get there.
Finally, you should plan out how you will spend the capital awarded to your business. No matter what you receive, you must be able to show that your company will use it wisely and that it will effectively work toward the overall success of your business.
Deborah Sweeney is the CEO of MyCorporation, a Calabasas, Calif.-based online legal services firm for entrepreneurs and businesses.
Related: How to secure funding for your business start-up
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