Getting a loan from the Small Business Administration (SBA) of US-backed is one of the best options, an established restaurant business to finance. The problem is that it may take 3-4 months to get approved for and received an SBA loan.
In the fast-paced hospitality industry, owners 
Enter SmartBiz . launched in 09 companies by the economic crisis will receive funding to help SmartBiz "SBA loans made easy." is motto They work with banks quickly SBA loans under $ 350K grant to, usually in 30 days or less . These are SBA 7a loan for existing companies, which may be used for working capital, purchase to refinance existing debt, commercial real estate, and other purposes. Restaurants are among the top industries SmartBiz serves. The company has processed more than $ 105 million in financing to restaurants.
Find out if you at SmartBiz prequalification (no credit score Impact)
When FitSmallBusiness.com , we have sent dozens of small business customers to SmartBiz, and many of them have in getting a SBA loan succeeded. In this article we will tell you how to get approved on for an SBA loan your chances.
are wondering how to get an SBA loan? Click here to get our free guide:
As for a SBA loan request
Get the basics in order
The average restaurant, one gets SBA loans by SmartBiz was for 10 years working, has at least 15 employees and annual sales of $ 720,000. If that sounds quite different from where your restaurant is currently not worry. You do not get to be the perfect candidate approved. It helps, however, to have the following bases:
- Two years in the business - SmartBiz only works with 2 + year old company. That does not mean it is impossible to get a loan if your restaurant is new. Your local bank or Top SBA lender , newer restaurants finance, if the owner has great merit, experience in the hospitality industry, and a 20% deposit.
- Personal credit score of at least 660 - evaluate Lenders look at your credit score, how likely you are to repay a loan. Ideally, you should be your credit score 660 or higher. If you do not know your credit score to learn for free here.
not meet the basic requirements? It is still possible to obtain a small business loan for your restaurant. You can wait until you hit the two-year black, so more options to you. You can also work on improving your credit in order to get an attractive candidate himself. Finally, you can check Alternatives to SBA loans .
How to increase your chances of qualifying for an SBA loan [work
With an SBA Preferred Lender
SmartBiz accelerates the SBA loan process by. the application process online and package the loan for you In addition to that one of their secret weapons works with preferred lenders SBA. If you do not apply by SmartBiz, I recommend using a SBA preferred lender work. You can is a list of SBA lenders preferred here .
There are two advantages to working with an SBA preferred lender. First, application and financing is much faster because the SBA delegates more authority to a preferred lender. The result is less back and forth between the SBA and the lender and faster disbursement of funds.
Second, preferred lenders have processed and understand the process much better than a newbie lenders numerous SBA loans. The loan process SBA can be confusing for both the lenders and borrowers, so it is best to work with a lender that has a solid record of providing SBA loans. If you have surgery, you would not go to an experienced surgeon? Getting financing is one of the most important steps to grow your restaurant in the future, so it is important to get it right.
to increase at least 0 Your KSS score
Almost everyone knows that they have a should have good personal credit score for an SBA loan to qualify. Less well known is widely regarded as the KSS score, which stands for Small Business Scoring Service Score. The KSS score (also called FICO credit score liquid) into consideration your personal credit history and the history of business credit each lender to answer the burning question: How likely is this place an SBA loan to be paid back?
The score ranges from 0 to 300; SmartBiz and most lenders typically prefer companies that have a 0 or higher KSS score. You can Your restaurant KSS score at Nav find . Lenders check KSS score for SBA loans less than $ 350K.
What if your KSS score is low? Focus on improving the two elements that make up the score: your personal credit score and business credit score. For many people the quickest way to improve personal loan is of to request a free copy of your credit report and any errors in dispute. In addition to focus time on invoices and to pay the debt reduction.
to establish and improve business credit , the other half of the KSS score, for the application, and responsibly with a business checking account or business credit card . You should also pay suppliers on time and encourage them to report your payments to the credit bureaus company-Dun & Bradstreet, Experian and Equifax.
There are several places where you can check credit scores for free. Personally, I like Nav the best, because it allows you to see your personal credit score, business credit scores and KSS score in one place. Check your credit scores to Nav, by clicking here. is
Enhance your debt service coverage ratio of at least 1.25
The more money your restaurant is generating and the less outstanding debt has, the easier to it qualify for a SBA loan. Sometimes solid sales and profits can also count and make for a borderline credit score or less security.
SmartBiz and the banks with which they work will verify your Debt Service Coverage Ratio (DSCR) when you apply. DSCR is your restaurant net income divided by its debt and interest payments. Ideally you should be 1.25 or higher DSCR. A DSCR of less than 1 is danger zone-it tells the lender your restaurant is not to generate enough income to service debt.
If your DSCR at the lower end is to increase profitability, is a way to make it up; existing debt loss is the other way. who eat an average profit margin of 2 to 6 percent , with full-service restaurants on the low end and limited service restaurants on the high end. If possible, it is necessary to raise menu prices, implementing cost reduction measures and pay as much existing business debt as possible to increase your profit margin and DSCR.
Collect as many collateral As You Can
Many people assume incorrectly that a SBA loans no collateral is required, because the government to ensure the credit for the bank. While the security requirements for SBA loans are less stringent than for conventional loans, your chances of getting approved are much better if you do provide collateral.
collateral be a mix of business and personal assets. Restaurant owners who have their place pledge the commercial real estate as collateral. You can also pledge restaurant equipment manufacturers, which can be very valuable as collateral. Personal assets include your home, car or stocks.
When deciding what to pledge as collateral, keep in mind that SBA loans require a personal guarantee from anyone who owns at least 20% of the company. So even if you can pledge any personal asset as collateral, the personal guarantee is your personal assets on the line, if the business can not afford to pay the loan back.
Lenders "Off" collateral if its value is to be determined. Property is discounted usually 80%, equipment 60% and other assets may be excluded even less. This means, for example, if you value your home is worth $ 400,000 mortgage, the lender can as $ 320,000 for the purpose of security. This will affect how much money you can borrow with your SBA loan.
Have Paperwork Ready to Go
After you prepared in advance the lender showing your loan paperwork you are serious about growth Your restaurant and your loan get on the financing, and it moves things along in the application process. SmartBiz has the SBA streamlined loan application process by requiring less paperwork, but you should still ready to go the following:
- SmartBiz application form
- SBA form 1919
- 3 years business and personal tax returns
- Year-to-date account balance and the profit and loss
- business plan with financial projections (we recommend the use of Live plan to easily create a business plan)
- Collateral statement
I suggest to collect these papers together in a dropbox folder, so you can easily upload, print and send it as desired.
are wondering how to get an SBA loan? Click here to get our free guide:
As for a SBA loan request
Final Thoughts
Following the above tips not guarantee that your restaurant for an SBA loan to qualify, but it will give you a much better chance and helps you get approved faster.
more about SBA loans Find out including various types there are in our Guide to SBA loans .
prequalification and price comparison SmartBiz!
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