From product innovation to sales to marketing, small business owners must handle a variety of tasks when running their companies. As a company grows, the need for more funds becomes more pressing. Opportunities for growth often require lump sums of cash, which can be difficult for small business owners to handle without a loan. While there are many types of loans available, new entrepreneurs may find it difficult to qualify for traditional funding. SBA loans can be an excellent solution as long as the business owners are prepared for the approval process. When seeking this type of loan, it is important to avoid making the following common mistakes.

1. Neglecting the Credit Score 

Some small business owners may struggle to establish a good credit score for their companies. However, no or poor credit can harm the chances of being approved for a loan. Even if the company is consistently performing well and has excellent financial records, a bad credit score can result in the denial of a loan. If entrepreneurs believe that they will apply for SBA loans soon, they should examine and clean up their credit and refrain from taking on new debts.

2. Withholding Important Information 

Whether intentionally or by accident, withholding information can be a serious problem. If additional debts or assets are discovered during the approval process, it can make the company look untrustworthy and like an unsafe investment. Entrepreneurs should update the business plan and create a spreadsheet of all the debts and assets. The information presented to the lender should contain a realistic projection of future cash flows as well as data from the last several years.

3. Not Presenting a Loan Amount 

Small business owners should know exactly how much money they can realistically expect to borrow and how much they actually need. Entrepreneurs should not walk into a lending institution and ask the representative to give them the maximum loan amount without any prior forethought. This can come across as a lack of planning and result in a rejection.

4. No Money for Down Payment 

Although SBA loans can fund various projects, the business is still expected to provide at least a portion of the money. Trying to get the money for a loan without demonstrating a willingness to provide the down payment can make it appear as though the company is struggling and may not be able to pay back the money.

Getting a loan can be a great way to aid in the growth of a company. If the entrepreneurs do their research and know what to expect, they can help the process go smoothly and increase the chances of approval.