When you are applying for a loan from the Small Business Administration, you don’t want to make any mistakes that could keep you from getting the loan. Here are some mistakes that business owners make when applying for SBA loans.

1. Not Having a Down Payment Ready

You should have at least 10% of the loan amount saved up for a down payment. This shows you are serious about getting a loan. You might be able to get away with a lower down payment, but if you have 10% on hand, you will be in a much better position.

2. Not Planning How Much to Borrow

Loan officers at the SBA will wonder if you know what you are doing if you don’t have a fixed amount in mind that you want to borrow. Make a plan for whatever you need the money for, and plan out exactly how much you will need. This will ensure that you don’t borrow too much and have a hard time paying it back, too.

3. Not Making a List of Collateral

The SBA will want to see what you can offer for collateral to back the loan. The SBA guarantees the loan but not the full amount. The bank will need to see that you have collateral that you are willing to put up as well. And you certainly don’t want to hide any assets with the idea that you can default on the loan and not have to use those assets to pay up. This is unethical and could be considered fraud.

4. Not Being Able To Show How You Will Pay the Loan Back

You should be able to show that you will have the cash flow to make payments on the loan. You will also need to show three years’ worth of tax returns for the business and your personal tax returns, as well. You will also need to show a personal financial statement in addition to the business financials.

5. Not Cleaning Up Your Credit Report First

Your business and personal credit need to be as good as possible when applying for SBA loans. Don’t wait until the bank has pulled your credit report to deal with problems. Be proactive and deal with all problems on your personal credit report and your business credit report before you even apply for the loan. Be sure you don’t have too much other debt, either.

If you avoid these common mistakes, your application for an SBA loan will go much more smoothly, and you will have a good chance of getting the financing you need.