Benefits of SBA Loans for Small Businesses
Acquiring a small business loan can be daunting. This includes the paperwork required, along with the amount of time it takes to fund the loan. With SBA loans, you have a long timeline for both of these, making some small business owners wonder if they are worth it.
The fact is, even though SBA loans take a lot of time and effort, they offer several benefits. Keep reading to find out what these benefits are.
Lower Interest Rates
When you acquire a small business loan, you will likely be concerned about the loan’s actual cost overall. This is why interest rates are a huge concern. In most cases, the lower, the better.
With SBA loans, you have the lowest interest rate available. While the actual rate you receive depends on your qualifications and creditworthiness, it is much lower than other loan options for small business owners.
Availability of Capital
You may find it difficult to acquire capital for your small business. If this is the case, it can put you in a tough place. While it is possible to access different financing for your business, some of these loans and alternative lending options aren’t ideal.
With an SBA loan, you can access the capital you need. With the 7(a) loan program, you can borrow as much as $5.5 million. This means getting the large lump sum of capital you need is completely possible.
Since the SBA is working with lenders (usually banks) and guarantees as much as 85% of the loans they issue, banks are more willing to work with a small business owner than if you tried to acquire the funding without SBA backing.
Repayment Terms
With a small business loan, the repayment timeline can be flexible. With an SBA loan, you have the longest repayment terms and a flexible repayment schedule. With an SBA loan, you can make monthly payments for up to 25 years for loans for real estate, around 10 years for equipment loans, and as much as seven years if you are acquiring the loan as working capital. This level of flexibility allows you to determine how you can fit your loan payments into the business plan as it continues to grow.
If you need funding for your business, you should look into SBA loans. They offer all the benefits mentioned above and more. Now is the time to apply since the approval process can take some time. Being informed is the best way to know if you should seek SBA loans.