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Small business loans in Utah: What to plan for and how you qualify

When you are starting your first business, sometimes it is a truly “by the seat of your pants” effort. There comes a time, though, when it’s possible that you will need more than just your own savings or help from investors to get your fledging work off the ground.

When you need that kind of push, a business loan can be a great option, but there are some steps you need to take in order to secure the loan that’s right for you. The Nerdwallet website is sharing some simple tips on how to get a loan, from getting your information organized to the options you may have from lenders.

One option that we know a lot about at First Utah Bank is the SBA loan. It’s ideal for a business that needs some capital for a variety of different reasons – all of which can lead to continued success in the business world. As your hometown lender, First Utah Bank can help you navigate this challenge with services based in the Beehive State.

The steps to securing a loan for your business

According to the Nerdwallet article, finding a loan to help with your new business starts with the answer to a question – what will the money be used for? The four common reasons they cite are:

  • Managing daily expenses
  • Savings for a business’s future
  • Starting up the business itself
  • Growing an existing business

Once you’ve identified the specific reasons, the next step is to decide what type of loan is best. In the first year, it may be a challenge to qualify for some loans, since lenders need to see cash flow in order to ensure that the loan will be repaid. So, after that first year, options open up, including term loans, lines of credit, invoice factoring and loans from the Small Business Administration (SBA).

Deciding what style of loan you need means that you next need to crunch some numbers. Compare lenders and the type of loan by annual percentage rate and terms, and choose the one that has the lowest APR, making sure that you cover the regular payments.

It’s also crucial to find out your credit score, an important part of the process. The article states that borrowers should have credit scores at least above 680 to be considered by most lenders.

Next, look carefully at what you make annually with the business, as that will likely determine if you qualify. You should also do the math when it comes to month-to-month cash flow and profit, to see if you can meet loan repayment requirements. One formula is have your total income be 1.25 times your total expenses.

Lastly, you’ll need your paper trail in order get the ball rolling with a lender. This includes:

  • Business and personal bank statements
  • Business and personal tax returns
  • Legal documents, such as commercial leases or incorporation paperwork
  • Business financial statements

Small business loans help Utah companies thrive

First Utah Bank is a preferred lender for SBA loans in Utah, and there are ways that our dedicated loan department can be your guide to navigating this option, which is best when traditional or conventional bank financing is hard to obtain or isn’t available.

As a Utah business owner, thousands of others like you have been successful in recent years, according to the Utah Annual Report by the SBA. Having this federal program helps strengthen a business’s start or sustain the growth and progress of a fledgling business.

There’s also more than one type of SBA loan, depending on what aspect of the business is needing a financial boost. For instance, there is the 7(a) Loan program, which is for business owners who need to purchase or refinance equipment or real estate. They are usually between 5-25 years.

The 504 Loan Program is more for long-term, fixed-rate financing, which means equity requirements are lower. This type of loan is ideal for buying or building real estate or acquiring assets for expansion or modernization.

There are also two types of SBA Express loan programs. One can be used for a line of credit or loans that are smaller in size, up to $350,000. There’s also the SBA Export Express, the simplest SBA program intended for companies that need to enhance export development and activities. Also available is the Working Capital CAPLine Program. This is similar in some ways to SBA Express, but it’s more for those who need to meet short-term and cyclical working capital needs.

As you continue to seek success as a Utah business, we want to be there to help make that a reality. Find out more about what we have to offer at our website, or call us at 801-308-2265.