What to consider before applying for federal small business loan

By Sam Tulip, Loan Specialist, Center for Rural Affairs
Posted 8/12/21

Do you have a great idea for a business? Or already own a business and are looking for ways to take it to the next level? A loan could provide the extra boost your small business needs.

However, …

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What to consider before applying for federal small business loan

Posted

Do you have a great idea for a business? Or already own a business and are looking for ways to take it to the next level? A loan could provide the extra boost your small business needs.

However, before applying for a loan, ask yourself these questions.

Why do you need the money?

What is that money going to help you accomplish?

What is the purpose of this loan?

Itemize how you’re going to spend every dollar that you’re going to be requesting. It’s really important that you’ve put some thought in beforehand as to how you want to use those funds.

How will this loan help you grow your business?

The purpose shouldn’t hopefully be just to keep doing what you are doing. You want to be looking to expand, to grow, to bring in new revenue streams.

Can I afford this loan right now?

Yes, you may want the money, but it’s important to make sure that taking out this credit isn’t going to stop you from what you’re currently doing. It’s going to supplement what you’re currently doing.

If you’ve already thought about those questions, it’s going to make the loan process a little bit easier.

It’s going to make you look like you are on top of your business, that you are professional, you are responsible, you are prepared.

A good way to work through those questions is developing a business plan.

Before reaching out and getting in touch with a bank or another loan entity, you should have some sort of business plan in place that helps organize and explain to other people all of the great ideas you have about your business.

Whether you are a starter business or a current business owner, there are many resources available.

One good place to start is sba.gov.

(The Center for Rural Affairs is a private, non-profit working to strengthen small businesses, family farms, and rural communities through action-oriented programs addressing social, economic, and environmental issues).

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