SBA Business Loan

Small Business Association Loans (SBAs)  or fundings can be used in many different ways to help your business grow.

SBA loans or fundings play a vital role in fostering entrepreneurship, driving economic growth, and empowering small businesses to thrive in a competitive market landscape.

 

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What is an SBA Loan or Funding and how does it work?

SBA (Small Business Administration) loans or fundings are a category of fundings designed to support businesses in the United States. The SBA doesn’t directly provide loans or fundings; instead, it guarantees a portion of the loan or funding amount, reducing the risk for funders and making it easier for small businesses to secure financing.

These loans or fundings are intended to assist businesses in various aspects, including working capital, equipment purchase, real estate acquisition, and more.

What are the advantages of getting an SBA Loan or Funding?

  • 1

    Flexible Down Payments
    Great advantage for small businesses with limited capital

  • 2

    Favorable Terms and Interest Rates
    May have favorable repayment terms and competitive interest rates

  • 3

    No Prepayment Penalties
    Businesses can repay the loan early without incurring additional fees

  • 4

    Credit Building
    Successfully paying off can contribute to building a positive credit history

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Minimum Requirements for a SBA Business Loan.

SBA Business Loans provide financial support to small businesses by offering favorable terms like low interest rates and longer repayment periods in order to facilitate growth and expansion.

  • 6+ Months in business
  • Fair/Good credit score
  • $100k annual revenue
  • U.S. Based business locations

What can an SBA Loan or Funding be used for?

Equipment Purchasing
Real-Estate Acquisition
Debt Refinancing
Business Expansion
Inventory Purchase

How small businesses have used SBA Business Loans or Fundings.

SBA Business Loans come with several benefits, including lower interest rates, longer repayment terms, and flexible requirements compared to traditional bank loans. Businesses can utilize SBA loans for a variety of purposes, such as starting a new venture, expanding operations, purchasing equipment or inventory, or refinancing existing debt.

SBA loans are partially guaranteed by the government, making them less risky for lenders and increasing access to capital for small businesses.

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FAQ’s

  • Why look at an SBA loan or funding?
    An SBA loan or funding is often originated by an advisor who works directly with a bank and/or with the SBA. Once the SBA credit application is approved, a bank will provide the loan or funding but the SBA will guarantee a portion of it.
  • What are the pros and cons of an SBA loan or funding?
    – Pros:
    Cost of capital is lower than most other loans or fundings
    Longer repayment terms
    Lower monthly payments
    – Cons:
    Process to obtain is longer than other loans or fundings
    Front-end fees may be charged
    Higher paperwork burden
  • How do I qualify for an SBA loan or funding?
    Every situation is unique, but there are minimum standards around business owner FICO, time in business, profitability, and business net worth. How the capital will be utilized will determine which program and exact requirements.
  • When should my business consider this type of loan or funding?
    Assuming the requirements are met, this loan or funding will typically be a lower cost option and should be considered when there is time for the business owner before the closing and capital is required. Key issues that may prevent the business from accessing an SBA loan or funding are poor owner credit, too much existing debt, lack of collateral, prior bankruptcy or negative taxable income.