Everything You Need to Know When Applying for an SBA Loan
The SBA, which stands for Small Business Administration, is a government agency that offers financial support to small businesses. SBA loans are a popular choice among small business owners who need more funding for their companies.
Keep reading to learn more about these types of loans and what you need to do when applying for one.
How Does an SBA Loan Work?
An SBA loan is not funded directly by the Small Business Administration. Instead, a business owner gets a loan from a bank, and the SBA guarantees the loan. This helps mitigate risk to lenders, allowing them to offer financial support for small businesses. There is more than one type of SBA loan available, each designed to suit the needs of different types of businesses. There are also SBA disaster loans available that can be used to repair or replace items destroyed in a disaster.
What Do I Need to Apply for an SBA Loan?
First and foremost, if you want to apply for an SBA loan, you need to make sure your business is a qualifying business. Each loan has specific criteria, but in general your business needs to be for-profit and operating in the United States. Next, review your options. There are several types of SBA loans, so take the time to review each one to see which the best fit for your business needs will be. You can visit your local SBA office in person to find out more information. Once you’ve decided which loan you are applying for, gather all required documents and check that you meet credit qualifications in advance. These types of loans usually require both good business credit and good personal credit. Your lender will also expect to see tax returns, financial statements, as well as a well thought out business plan.
What Are the Benefits of an SBA Loan?
Lower interest rates, smaller down payments, longer repayment terms and fewer fees are all benefits gained from choosing an SBA loan. While they can be harder to qualify for, and take longer to get, these loans can also greatly improve your business credit, opening future lending opportunities.
At the end of the day, all business owners need to find great financial tools to help support their business needs. The SBA is in the business of supporting of providing this kind of financial support, making SBA loans a great option for small businesses in the U.S.