The U.S. Small Business Administration (SBA) provides and guarantees loans to small businesses in the country. Every year, it lends well over $20 billion to successful applicants.
As an entrepreneur, raising adequate capital to start and fund a new business is one of your biggest challenges. The good news is there are several funding options you can look into, including taking out an SBA loan.
But is an SBA loan any better? Is it worth it putting up with the strict application requirements for SBA loans instead of taking out a regular business loan?
Well, it turns out there are big benefits to reap when you start a small business with an SBA loan. Keep reading to learn more!
Access to a Range of Business Loans
The SBA, through partner lenders, guarantees a range of business loans catered to specific purposes.
If you’re looking to start a small business and you need less than $50,000, for example, you can go in for the SBA Microloan. This type of loan is also ideal for businesses looking for expansion capital.
There are 504 loans, which are long-term, fixed-rate loans designed for businesses that want to purchase real estate, manufacturing equipment, and machinery.
7(a) loans guarantee a percentage of the total amount and have lower rates and fees.
When a business loan is designed for a specific purpose, it’s easier for an applicant to qualify for it and get approved. You’ll have an easier time proving why you need the money.
All you have to do is to find the right SBA lender in your area. View more to learn about some of the top lenders in the country.
Access to Counseling and Education
When you get a business loan that isn’t backed by the SBA, your lender expects you to start paying up as soon as the first installment is due. How you utilize the funds is up to you.
The same can’t be said of SBA loans. When you get an SBA loan, you’ll gain access to professional counseling and education. You’ll be in a better position to manage the funds prudently and run a successful business.
At a time when so many small businesses are failing, there’s no denying you can do with a little bit of professional guidance.
Friendlier Rates and Term Limits
SBA loans are competitive, which is to say they’re priced more or less like other similar business loans. However, in most instances, an SBA loan will have a lower interest rate and the term limit will be longer.
The net effect?
Your business not only gets to save money but also gets adequate time to pay off its loans. Your monthly payments will be lower because of the longer terms, thus helping keep your business free of financial pressure.
Get an SBA Loan!
If you were on the fence about getting an SBA loan, it’s time to start filing that application. As we’ve demonstrated, SBA loans offer unique benefits you wouldn’t otherwise get from a traditional business loan.
Our blog has lots of business advice, so keep reading!