If you are a small business just starting up in America, chances are that you have heard of SBA loans. The SBA (Small Business Administration) works with small businesses looking for a helping hand in order to grow and transform their business into something big. Many start-ups use loans to help get them on their feet and to ensure they have enough money to put into their business. Here is a quick guide to the different types of SBA loans and what you need to consider before choosing this type of loan.
Who Qualifies for an SBA Loan?
This loan is there to support new and small business and whilst the overall application process can be lengthy and complicated, your chances of getting an SBA loan are good. As long as you personally have good credit, you will more than likely be accepted for one of the SBA loans. Whilst personal credit is not the only influencing factor, it is a big part of the decision-making process. If you don’t have a great credit score, look at ways in which you can improve it here.
The Different SBA Loans Available
There are several different SBA loan programs available, so you are bound to find the one that is right for you and your business. The three most popular SBA loans are as follows:
- The (SBMP) Small Business Microloan Program – During this loan process, the SBA will work with a third-party and a nonprofit lender. From this, loans as large as $50,000 can be borrowed.
- The CDC/504 Loan Program – This loan scheme allows small businesses to borrow a fixed-rate, long-term loan. This is usually for small businesses that want to modernize or expand their company.
- 7(a) Loan Program – This is the best loan choice for businesses that are just starting up and want access to working capital.
The Application Process
This is by all means not a quick and speedy process, but it is a great way to lend money for your new or small business. You need to ensure that all of your documentation is clear and completely up to scratch, otherwise, they may ask you to begin the process again. You need to be aware of these SBA loan requirements, which include an in-depth business plan and a good credit history.
Is an SBA Loan Right for Me?
SBA loans aren’t the right choice for everyone so if you have a poor credit rating, it may be best that you look at finding another small business loan company. If you can apply for an SBA loan, do so as there are many advantages of choosing this kind of loan. An SBA loan usually has generous lengths of borrowing, such as ten-year agreements. They also have caps on their interest rates and lower down-payments.
An SBA loan is a great choice for those businesses who are just starting out or for small businesses looking for a helping hand.
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