Preparing for Small Business Loans from the SBA


Newlyweds Jack and Kelly Page took a life-changing step in 2012 besides getting married: They prepared to open their own Menchie's franchise, one of the fastest-growing frozen yogurt companies in the United States.


They signed for five units in the Houston area and opened the first one in May 2013, but Jack Page told FranchiseChatter that the couple did it without a small business loan from the Small Business Administration. The SBA small business loans program required them to supply financial records from the business, which they had not yet opened; Their credit score also did not pass muster with the SBA. Finally, the couple was contributing too much of their own money, which precluded them from qualifying for SBA small business loans.


"So after one phone conversation we realized that we wouldn't qualify and stopped pursuing," Jack Page said. "Plus there were other small business loans that we did qualify for that were very attractive (asset-based loans)."


SBA Loans Can Be Elusive


The Pages' story is not unusual and could serve as a cautionary tale for aspiring business owners who are relying on the SBA for small business loans to open a new businesses. One misperception is that the SBA, an independent government agency, provides small business loans. It does not. Rather, it guarantees that small business loans obtained through conventional sources are repaid. That means new business owners must still approach commercial lenders for financing, but especially those that offer SBA-backed loans.


Tips For Securing Small Business Loans


Here are some of the tips from the SBA website for those looking to secure small business loans:


■ Research potential lending institutions focusing on banks that are familiar with your industry and target market. Community banks, as opposed to large national banks, might be more willing to loan money to a business that is in the same locale and whose owner it has developed a relationship with from past transactions.


■ First things first: Before applying for small business loans, be sure to have proper documentation. Use the Business Loan Checklist at to view typical items that will be necessary for applying for small business loans.


■ Prepare your loan application. If you are pursuing a small business loan application for an SBA loan, there are specific types of information that you will need to provide as you work with your bank to submit a loan package to the SBA for approval. More information about what you will need can be found on the SBA Loan Application Checklist.


■ Prepare thoroughly for your loan application interview. Rehearsing what you will say is not a bad idea and be ready to provide facts that will back up the claims on your small business loans application. Presenting a professional, positive image and communicating with confidence and authority can make all the difference.


■ Seek expert advice. The SBA itself is a good resource for experts on small business loans. Contact your local SBA office or Small Business Development Center to discuss strategies with someone familiar with the process. Take advantage of free seminars, publications and services that might be available for securing small business loans.


The Pages haven't given up on the SBA. With one store open, they plan to get some additional business experience and financials under their belts and approach the agency again for small business loans when it comes time to open their third, fourth and fifth Menchie's outlets.