SBA Loans – The Benefits and How to Apply

The Small Business Association (SBA) works in favor of small businesses by providing them with various support programs and extending them financing help to set up their units. Financing support through SBA loans is a major assistance extended to promote the growth of small businesses in America and in turn to drive the US economy. Realizing that small businesses are integral to the economy, SBA extends training, counseling and other valuable resources besides funding assistance. Start-ups and businesses with lower capital base can seek help from SBA to set up their units and carve a niche for themselves.

How Do SBA Loans Work?

Most businesses approach the SBA for loans as it is easy to secure them rather than lending from banks with stringent policies and private lenders. The organization also comes forward to lend small businesses in the form of guarantee bonds and facilitate venture capital to enable them to flourish and sustain in tougher times.

SBA charts out the guidelines for extending loans to small businesses and these guidelines are then followed by their lending partners. Risk of lending to startups and emerging small businesses gets reduced when the SBA guarantees loan repayment to the lending partners. Hence, lenders think it better to extend finances through the SBA and small businesses, too, can secure loans from lenders at favorable terms.

Benefits of SBA loans

The SBA loans are provided to small businesses at lower interest rates and favorable repayment terms. The organization charges lower down payments as compared to bank and hence it is a favorite of small business owners. Longer repayment period for paying back the funds empower small businesses to manage their credit flow by spending less on loan repayment and meeting the operational costs.

Additional benefits

• SBA extends up to 90% financing
• Repayment terms are extended up to 25 years
• Loans up to $11.25 million
• Fixed and variable rate options offered for SBA loans
• Personalized services offered by the bank
• No balloon payments

How to Apply for a SBA loan?

There are different application processes involved for securing loans from the SBA. Although the organization has flexible standards for helping businesses qualify for loans, there is extensive documentation required to process the loan request. Small businesses taking the loan need to furnish all the relevant information related to their company and the industry in which they are operating to help the lender assess the repayment of loan capacity.

Small businesses should place an application for a SBA loan, briefly describing their business background, the nature of their operations, and amount of loan and repayment mode. Giving details about the sakes, suppliers, management experience, employee strength in the company profile will let SBA evaluate your loan request properly. Small business owners must also mention the collateral’s they can keep against the SBA loan and furnish personal as well as business financial statements to give the organization a peek into the profit and loss incurred each year by their company. Future projections for a period of one year with valid documentations and reasons can convince SBA to facilitate financing without getting worried about repayment.

About Biz2Credit

Founded in 2007, Biz2Credit is a leading credit marketplace connecting small- and medium-sized businesses with lenders, service providers, and complementary business tools. The company matches borrowers to financial institutions based on each business’s unique profile — completed in less than four minutes — in a safe, efficient, price-transparent environment.

Biz2Credit’s network consists of 1.6 million users, 1,100+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers.

Having arranged $800 million in funding throughout the U.S., Biz2Credit is widely recognized as the #1 online credit resource for SBA loans, lines of credit, working capital and other funding options.  Follow us on Twitter @Biz2Credit for small business news and updates.