Applying for an SBIC Loan Tips and Tricks


Small business investment companies loans tips and tricks: Are you looking to start your own small company? Do you wish to find any investment source for the same? Then a Small Business Investment Companies Loan is your solution for the same. 

As a small business owner, it is evident that an individual would seek capital investment to grow their funds. 

One might need funds for equipment repairs, market expansion opportunities, economic dislocations (like the COVID-19 crisis). To be ready to fight these financial issues, it is always advisable to get a small business investment loan. Understandably, it can be hard to find an SBIC loan. So, to make it easier, we have created a small business investment companies loans tips and tricks guide for you. 

But, before discussing these small business investment company loans tips and tricks, it is essential to know a little more about SBIC. 

What is SBIC?

Small Business Investment Companies are private ownership entities. They manage investment funds for small businesses. SBIC uses their capital plus funds – borrowed with an SBA guarantee – to make equity and debt investments in qualifying small businesses. It is a licensed institution and regulated by SBA.

The Small Business Administration does not invest directly into small businesses through the Small Business Investment Company Program. But, it does provide funding to qualified investment management firms that are experts in specific fields. For every $1 a Small Business Investment Company raises or earns from a private investor, the Small Business Administration will typically provide $2 of debt capital (with a cap of $150 million). 

Firms combine their capital with funds borrowed from the federal government at low rates. In return, they invest these funds in trustful new ventures. And it’s all done with zero taxpayer dollars! 

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Small business investment companies loans tips and tricks 

1 Tidy Up Your Personal Credit

What does your personal credit do with getting a small business loan? If you don’t have business credit or your business credit is poor, you’ll be leaning on your personal credit to get approved.

Moreover, your personal credit matters if you’re hoping to get approved for a loan through the Small Business Administration (SBA).

Further, SBA loans are prevalent; the SBA guaranteed more than $28 billion to entrepreneurs in 2019. However, the SBA has strict requirements. For example, you need solid personal credit plus substantial business revenue to qualify. You won’t be eligible for an SBA loan if you have defaulted on a federal student loan or a government-backed mortgage loan.

2 Create an undeniable business plan 

Investors want to know what you will use their money for, and they also want to see that you’ve got a solid ability to repay the loan debt. Further, a business plan is the most common and effective way lenders retrieve this information.

Before applying for loans, create an undeniable business plan that clearly demonstrates how your business will have the cash flow. This cash flow is required to cover your operational expenses with your loan cross up. Thus, if the investor can see this information clearly, they will have more confidence in lending you money.

3 Reduce Your Debt-to-Income Ratio

On both business and personal sides, reduce your debt-to-income ratio as much as possible before applying for a loan. Further, if your debt is too high compared to your income status, lenders see that as a negative sign that you would not make your payments. This is one of the most important factors investors look for before generating a loan.

4 Keep Your Daily Bank Balance in perfect ratio. 

There are different reasons to keep the daily bank balance in a perfect ratio. Some loans are approved or rejected depending on a daily bank balance rather than business generated income. Also, investors want to know you have cash on reserve to make your loan payments.

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5 Boost Business As Much As Possible Before Going for Investment Pitch

Investors are more likely to approve loans for small businesses generating revenue. You won’t have the income to boost if you are just starting out. However, if you have started your business, spend some time increasing your sales as much as possible.

You can boost your revenue by:

  • Talking to a professional marketing firm to launch a new campaign
  • Running PPC ads regularly and by using re-targeting
  • Running an email marketing campaign to create leads until they become full-time customers

You can always do something to boost business revenue and show lenders you can repay a loan.


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