8 SBA Loan Challenges You May Face and How to Overcome Them | Florida Capital Bank

Utilizing a Small Business Administration (SBA) loan to move further towards the goals you’ve set for your business is a great idea—one that was effectively used by more than 12,000 small-business owners in 2016. However, the process may not always come without bumps in the road. While many borrowers meet the same challenges when it comes to obtaining an SBA loan, there are solutions that will get you to your end goal.


  1. Overwhelming Documentation

Between tax returns and loan history lists, there will be a lot of documents that you will be required to provide for your loan application. In order to overcome this first challenge, your best bet is to utilize the SBA’s documentation checklist to keep track of what is being asked of you.


  1. Weak Personal Credit Score

Despite your efforts to obtain a loan for your business, your personal credit will still be considered. If your personal credit score is effecting your progression, then straightening this out should become a high priority. If you need to build credit, consider taking out a credit card to use sparingly, and paying it off every month. If you have to repair your credit, focus on paying down debts and other loans. Once you strengthen your personal credit score, you should be more comfortable revisiting an SBA loan.


  1. Too Much Credit Card Debt

Again, your personal finances affect your ability to get an SBA loan. If you’ve been using your own credit cards to run your business and it has been affecting your credit score, or if you have a lot of credit card debt, this can hinder your SBA loan process. Paying off your credit card debt is the only way to resolve this problem, so just like strengthening your credit score should be a priority, this should follow close behind.


  1. Low Business Profitability

If your business has not been meeting expectations in terms of profitability, it is in your best interest to focus on minimizing expenses and boosting sales. There are many ways to market yourself to gain customer interest, from creating your own website to networking with potential partners to using social media platforms. Once your business rebounds from slow months, come back to see if taking out an SBA loan works for you.


  1. No Solid Business Plan

How can you convince a lender that you are a worthwhile borrower without a plan? To ensure that you communicate the projected future of your business, you’re going to need a business plan. For tips on what to include in order to form a solid and effective business plan, check out this past FLCB blog.


  1. Poor Timing

While you cannot help if you are currently in a bad time to take out a small business loan, you can prepare yourself for the right time. Know that the SBA loan process can take up to 60 days to be completed, so plan accordingly. Start when you are comfortable and ready to expand; if you are strapped for the cash to support your business, then you have waited too long.


  1. Lack of Capital

It may not make sense that you have to have capital to obtain capital but this reassurance to a lender is important because it allows you to be seen as a low-risk borrower. If you do not have access to a considerable amount of cash before you apply for an SBA loan, postponing your application and building that reserve can eventually rectify this problem.


  1. Getting Denied

Unfortunately, not every loan application can be approved. However, should you face this challenge, do not run to close your storefront and pack up your things. This does not have to be the end of the road should you not want it to be—figuring out what factors effected the decision you got and working on those issues before you return to an SBA loan again can cause for different results.


Whether you run into one or all eight of these challenges when applying for an SBA loan, the important thing to remember is that there are solutions to each of them that may work for you and your business. Taking your time and planning ahead will help your application process, and move you closer to your goals.


 If you’re ready to get started with the SBA loan process, contact one of our Florida Capital Bank loan specialists today!