Whether you've been in business for years or you're looking for financial assistance to start up your small business, there are several different avenues you can take to help get some extra cash flow. One of the most well-known methods to achieve this goal is via the SBA, or Small Business Administration loan. These loans are are offered by the United States government through certain lending institutions, and are designed to help companies reach their goals towards success.
Why Would You Need a Loan?
Every business has its own reasons for needing a loan, but for many it is simply to help them acquire new equipment or inventory to get their business moving in the right direction. Others may need extra money in order to secure a building to operate their business from. The SBA loan can even help you with obtaining money needed to acquire another business or refinance your current debt. The reason for choosing the loan is entirely up to the individual business.
How Does it Work?
A common misconception is that recipients of an SBA loan get the money directly from the Small Business Administration. In fact, borrowers must choose a bank that currently participates in the SBA loan process. The application procedure is similar to most other types of loans. You'll need to be prepared to submit things like your credit history, financial statements, and any assets you may currently have. The two most common types of SBA loans are the 7(a) loan designed to provide money for general business purposes, and the CDC/504 loan, geared more towards purchasing assets such as equipment or a storefront or office building.
What Are The Details?
The process of receiving an SBA loan can take thirty days on average, but in some cases it may take longer. This often depends on the amount of money you've requested as well as how easy it is to obtain all of the information needed to process the loan. Interest rates can vary, but are typically anywhere from as low as six to as high as thirteen percent. You can borrow anywhere from $5,000 all the way up to $5 million, but this will obviously largely depend on a number of different factors including your current profits, track record, and credit history.
If you own and operate a small business and are in need of extra working capital. the SBA loan is an excellent place to start.