Growing your business: Tips for applying for small business loans

The outlook for small business is up with many business owners feeling good about the future of the economy, their financial positions and their plans for growth, according to Capital One’s Spark Business Barometer. But for many business owners looking to secure capital to either start or expand their enterprise, the process can be challenging, particularly for those with a limited or negative track record, or poor personal credit. Fortunately, there are a variety of products and programs designed to help address those challenges and enable business growth, one of which is offered through the U.S. Small Business Administration (or SBA).

SBA loans offer a number of key advantages, including longer payback terms and higher borrowing limits, which can be useful when financing necessities like real estate and equipment. For example, Freshbikes, a bicycle shop based in the Washington, D.C., area, worked with Capital One to refinance debt it incurred by expanding its business and opening new stores. This resulted in an improved payment schedule and additional working capital for the now-thriving business.

Unfortunately, despite the many benefits SBA loans offer, few small businesses take advantage of them, and those who do say they find the process for applying for SBA loans “complex and confusing.” In fact, Capital One’s latest Spark Business Barometer found that a majority (79 percent) of small-business owners are aware of SBA loans, but only 9 percent have actually applied for one (and most business owners who did apply found the process complicated.)

There are a number of ways to simplify the SBA loan application process, and given the SBA recently announced that they will extend fee waivers for loans meeting certain requirements, now is a great time to understand how these loans can work for your business and consider applying for one.

Capital One has a few tips to keep in mind when applying for an SBA loan:

* Know your business. The first thing any lender wants to know is how well you know your business. Do you know your cost of sales, gross margin, payroll expenses off the top of your head?

* Look for a Preferred Lender (PLP status). Preferred lenders have more experience and authority in processing SBA loans, which is critical when it comes to navigating the SBA’s requirements and procedures. Working with a lender who fully understands the process and can explain it to you will make life a lot easier. Since they are experts in this area, typically your loan will close more quickly, as well. Preferred lenders are usually listed on the SBA website for your state. You can always contact the SBA directly as well.

* Come prepared. SBA loans require comprehensive document packages. Be prepared with full copies of your personal and business tax returns for the last three years, current financial statements and projections and personal financial statements. Check the SBA’s website at for required documentation for the product that interests you. Having a complete package up front can save a lot of time.

* Consider applying for a smaller loan. In an effort to streamline the application process, the SBA recently announced plans to maintain current fee waivers to make it easier to secure smaller loans for small business, including a 2 percent fee waiver for loans $ 150,000 or less. If you want to reinvest in your business, now is a great time to act.

Capital One is committed to helping small-business owners achieve their financial goals by offering SBA loans with features or opportunities that might not be available through conventional loans, and helping small-business owners to navigate the application process. For more helpful information on managing a small business, visit

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