Funding your Business with an SBA Loan
Courtiers Immobiliers Outaouais is an ideal way to finance a business. Small business owners can use this loan to start, purchase, or expand their business. With better terms and longer repayment terms than most commercial loans, SBA loans are a great option for many entrepreneurs. Read on to find out more about what an SBA loan can do for your business.
What is an SBA Loan?
An SBA loan is a loan that is backed by the U. S. Small Business Administration (SBA) and offered through certain banks or lenders. It can help small businesses with purchasing real estate, equipment, and other assets they need in order to grow or maintain operations. These loans also offer flexible terms and longer repayment periods.
Types of SBA Loans Available
There are several types of SBA loan programs available, including: SBA 7(a) loans, which are the most popular and typically used for expansions or startup costs; SBA 504 loan program, which offers long-term fixed rate financing for purchasing of approved capital purchases such as land, buildings and/or equipment; and the recently introduced SBA Express Program, providing access to quick funding for various business needs.
Qualifying for an SBA loan
In order to qualify for an SBA loan, potential borrowers must meet certain eligibility requirements. Generally, the borrower must be operating a business with 500 or fewer employees, have a viable business plan, and demonstrate an ability to repay the loan. Additionally, the business must be located in the United States and majority-owned by U.S. citizens.
SBA Loan Benefits
The benefits of SBA loan compared to traditional bank loans are numerous. For starters, SBA loans offers more options and flexibility with repayment plans. Additionally, interest rates tend to be lower than those of regular loans and the repayment periods are extended – up to 25 years depending on the type of loan. Finally, the SBA offers a guarantee of up to 85% of eligible loans made to qualified applicants, reducing the risk for lenders.
Preparing for Your SBA Loan Application
When applying for any type of loan it’s important to be prepared and organized. Having the right documents on hand when you approach a lender will enable them to evaluate your application accurately and expedite the process. Documents you should have ready include financial statements, business tax returns, and a general overview of the business plan. Additionally, having all of the facts and figures regarding the current and projected state of the business can help SBA lenders make a more informed decision.
Understanding SBA Loan Collateral Requirements
Although most traditional bank loans require some form of collateral, there are exceptions. When it comes to SBA loans, most often the only collateral required is an assignment of the business’ insurance policies and accounts receivable. This means that, for most small businesses, the business owners will be able to keep personal assets such as home, cars, and investments out of reach from creditors in case of default.
Tips for Applying for an SBA Loan
Applying for an SBA loan requires a lot of paperwork and due diligence. Be sure to read the small print and ask questions if you’re unsure of anything. Also, be mindful of how long the loan process takes – typically 4 weeks or more. Lastly, make sure that you’re working with a legitimate lender. The SBA has provided a list of accredited lenders who are authorized to provide SBA loans.
All in all, an SBA loan is a great way to finance a small business. With competitive rates, longer repayment terms, and reduced collateral requirements you can rest assured that your business is getting the best deal possible. So why wait, see what an SBA loan can do for your business today!
