The first quarter of every year is traditionally a popular time for would-be small business owners to launch new endeavors. It makes sense; New Years Resolutions and whatnot. If you’re among those who plan to take the leap and become small business owners this year, chances are you’ll find yourself concerned with the doings of the Small Business Association (yes, the other “SBA”), the Federal Government entity devoted to managing and addressing the interested of small business in the US. More specifically, you may find yourself looking to – as so many people do – apply for an SBA loan. If that’s where you are in your business development process, listen up: here’s what to expect from the SBA in 2013, and tips to maximize your chances of getting the support you need.
In 2013, expect to see the SBA focus on three big things:
1. Capital for businesses
The SBA is responsible for managing the distribution of Federal capital to small businesses in this country, usually in the form of loans. This is one of the chief jobs of the SBA, and one of the primary reasons small business owners find themselves caring about the SBA at all. 2011 marked a record-breaking year for number of loans issued to small businesses due in part to a boost by the Small Business Jobs Act of 2010. While 2013 is unlikely to see record-setting numbers of loans being issued, we can expect this year to be at least on par with 2012.
2. Federal contracts
In the US, 23% of Federal contracts are required to go to small businesses, including 5% to women-owned small businesses. The SBA is responsible for making sure this happens. In 2011, the government didn’t quite reach its goal, hitting 22% and 4% respectively in each of those categories. In 2013, the SBA is expected to devote even more energy and resources towards ensuring that those goals are met. Obviously, this is good news for small business owners, assuming their plans work out.
3. Disaster relief
After Hurricane Katrina in 2005, the SBA was heavily criticized for its slow response time in distributing loans to businesses damaged by the storm. Following Hurricane Sandy, it is the SBA’s steadfast goal to not repeat that same mistake. Not only can we anticipate better responsiveness for victims of Sandy, but a reworking of the infrastructure that supports this kind of response in the future.
When applying for an SBA loan:
- Give it time
- Typically, a business needs to be profitable for at least 3 years before being positioned to qualify for an SBA loan. So if you’re just starting out, you’re likely going to need to pursue other channels of capital, at least for now.
- Plead your case outside the box
- A business loan isn’t the kind of thing where you can just dot all the Is and cross all the Ts and expect to get immediate approval (although, to be fair, you do have to dot a lot of Is and cross a lot of Ts, too.) Make sure to thoughtfully articulate to your prospective lender, both verbally and in writing, why your business is a sound investment. Are you anticipating serious market growth? Are you expanding with very promising potential? Do you have a big merger coming up? These are relevant, even if you don’t see a pre-assigned space to explain these things. Your job is to give your bank a comprehensive picture of your business. This includes future potential, not just an account of past records.
- Be meticulously organized
- There’s nothing more frustrating that putting energy into applying for a loan, only to realize that you don’t have all the documentation you need. Not only does a lack of organization in the loan process make more work and stress for you, but it doesn’t make you look very appealing to your lending institution. Know ahead of time exactly what you need, and don’t apply for the loan until you have absolutely everything in order.
- Call Newtek, The Small Business Authority
- As the nation’s largest non-bank SBA lender, why not talk to someone to undisputed Leaders in small business services where your success is ours! Visit us online at TheSBA.com or call us directly at 1-877-323-4678 for more information.