So, you want to start your business and you need some money. Nothing unusual, because nobody starts his/her business from the well-stocked bank account. Small Business Administration is a government agency, which helps people to obtain money for their enterprise. They do not give you any money; they work as very strong cosigners of your bank.
You are a student without any previous experience in business. No problem, because banks always prefer to minimize their risks. Guarantee by the SBA means that the bank will be paid by Uncle Sam in case you will not. That is why, such loan will be much more profitable than a regular loan, because banks are afraid to lose their money.
At first, you need to have a business plan. It is wrong to go to a bank with good attitude to their work only. You need a paper, which describes your business, its goods/services, customers and ways of getting profit from this business. It means, you need a business plan, which is a very helpful instrument while looking for money. You should be aware of your credit score. It will be checked by a bank, because you have no business history.
Several types of loans are available via the SBA. One of the most popular loans is an SBA 7(a) loan. With its help, you can do everything, which you need – for example, to buy equipment. SBA Microloan will suit students perfectly well. It gives you small amounts of money – up to 50,000 dollars.
You will have to collect all the necessary papers. Such papers as tax returns, bank statements and ID will be needed, as well as the description of your collateral. Collateral means something valuable, which may be confiscated in case of default.
You will have to find a lender. Use the SBA Lender Match tool for it. You will be able to find all the lenders in your area there. Do not be afraid to talk with a loan officer – he/she will give you an answer on all your questions. Ask as many questions as you can in order to understand everything about terms and interest rates.
This process needs a lot of patience. Banks work slowly. Work of governmental organizations is even slower. Be prepared to wait. Make sure that all your papers are collected in one place, so that you can easily send them when it is asked. Be not afraid of refusal – ask what you can improve and try once again.