What Business Owners Need To Know About SBA Loans

As a business owner in America, it is important to know the possible financing options that are available for your company. Read on to find out about one of them, SBA loans.

What are SBA loans?

SBA loans are forms of financing available to small business owners from lenders such as banks, which are secured by the Small Business Administration (SBA). They can go as high as $5 million and come with significantly small interest rates not exceeding 10.25%, as well as longer repayment periods compared to most other financing outfits.

These loans are perfect for small business owners who are looking for the funds to expand their businesses with new locations, more employees and assets, or simply need to keep the cash flow going to cover an unusually large work order.

How can a business owner get an SBA loan?

First of all, before considering getting an SBA loan, a business owner has to be sure that the business is eligible to apply for the loan in the first place and has all the necessary documentation like tax returns both corporate and personal, financial statements for the business and the business owner, a historical documentation of loans taken, and a business certificate. A checklist with all the requirements can be found by visiting the SBA website. After locating all the documents, the business owner can choose from the approved SBA lenders and take in an application. Although most lenders abide by SBA guidelines, they also have their own specific criteria by which they consider loan applications.

What kinds of lenders offer SBA loans?

Primarily, SBA lenders are traditional banks. They have a lot of experience with processing SBA loans and if a business owner chooses the right bank, their lending staff can make sure the entire process is as productive possible. The downside to this is that choosing the wrong bank as an SBA lender can turn out to be a huge hassle. However, online SBA lenders have become more common and have made it possible to get SBA loans with more ease and in less time. There is zero bureaucracy involved with these online institutions and even though their requirements are much more stringent than those of traditional banks, requiring true proof of a strong business with good financial ethic, those companies who pass their tests get access to funds in record time, etc.

How long does it take to get an SBA loan?

An SBA loan application can take weeks to get approved. In some cases, it can take months. The length of time and chances of approval are typically directly correlated with the financial health and reputation of both the business and the business’ owner. Companies that have been in business for multiple years, have made profits and shown themselves to be credit-worthy are most likely to receive their loans in the quickest possible time.

If you run a strong business and are looking for a realistic opportunity that will help you take your company to the next level, then you should consider applying for an SBA loan. However, if your business is not profitable and is in fact struggling, you will not be able to get an SBA loan and probably should not apply in the first place. Also, if your business needs to focus on working properly instead of raising funds, then that should take priority over the time-consuming process of applying for an SBA loan.

If you have any more questions about SBA loans or for small to medium-size business financing, please don’t hesitate to reach out to us by clicking here, and let one of our financing specialists help you.