The following are common questions that small business owners have about SBA loan programs and the loan application process.

1. How do SBA loans work?

While the SBA does offer numerous loan programs to help small business owners finance their businesses, it doesn’t actually lend businesses the money. Instead, a bank makes the loan, which is backed by the SBA. This allows the bank to take a little more risk than it otherwise might. So this means that if you are seeking a business loan and don’t qualify for a traditional bank loan, perhaps because you don’t have the collateral or years in business to justify the loan, the government can help—although you still need to work primarily with a bank.

2. Who makes the decision that an SBA loan is right for my business?

If you’ve been turned down for a traditional bank loan, or are curious about SBA loan programs, where should you start? Should you go to the bank and ask for an SBA loan, or would they instinctively guide you toward one?

While your local SBA district office can help explain the available loan programs and determine your eligibility for them, you’ll need to find a local SBA lender to kick-start the application process. These banks and financial institutions can help you determine which loan program might be right for you, whether it’s a traditional bank loan or an SBA-backed loan. They are also your point of contact for processing your loan application.

3. How do I determine which SBA loan is right for me?

The SBA offers numerous loan programs depending on your business profile, financing needs, growth plans and so on. There are a number of ways to identify the right loan program for your business. If you are in the early stages of exploring your financing options, check out the SBA’s Online Loans and Grants Search Tool (www.sba.gov/loans-and-grants). Answer a few quick questions about your business, and the tool will suggest government financing programs for which you might qualify.

Once you’ve done your research, consult your local SBA district office and ask them to steer you toward a few SBA lenders in your area so that you can be sure you’re getting the right loan program for your business—and the right bank!

4. How should I prepare for my meeting with the bank?

Preparation is key, and it’s important to understand some of the criteria that might influence your eligibility for an SBA loan. These include credit factors—such as making timely debt payments (payment on existing credit relationships, both business and personal, is considered an indicator of your ability to repay a loan), cash flow projections and your debt-to-worth ratio. Collateral and working capital are other factors that may impact eligibility.

SBA offers guidance on all the factors that lenders look at here: www.tinyurl.com/ SBA-credit-factors. You’ll also need to ensure you are in good standing with your state treasury and the IRS (i.e., you’ve paid all taxes owed). And don’t forget the most important document—your business plan with at least three years of financial projections; a view of what you’ll do with the proceeds of the loan; and solid proof that you know your industry and target market. This is particularly important for startups that don’t have a financial history. The bank will base its decision on your industry experience and future plans.

If you don’t have a business plan, check out SBA’s Build Your Business Plan Tool, a step-by-step guide to help you get started (www.sba.gov/business-plan/1). You can save the plan as you go and download it when you’re done.

5. What do I need to complete my SBA loan application?

An incomplete loan application won’t do you any favors with the bank and could slow down the entire loan process. Familiarize yourself in advance with the key components of the loan application—from the right forms, to the necessary background information. Refer to this SBA Loan Application Checklist (www.tinyurl.com/loan-checklist) to ensure you have all your i’s dotted and t’s crossed. SBA also offers a free online training course: How to Prepare a Loan Package (www.tinyurl.com/prepare-loan-package.