Why You Should Consider SBA Loans for Your Business
When you decide to grow your business, you’re going to need access to money to make the necessary changes and investments. For most business owners, this means taking out a loan and while there are many different lenders out there and hundreds of loan types to choose from, few are as ideal for smaller companies as SBA loans. These loans are guaranteed by the Small Business Administration and are available from many banks in your area. Here’s why you should consider using these loans instead of other financing options.
You’ll Get Lower Interest Rates
As a newer small business, you may not have the necessary business history to qualify for affordable traditional business loans in the first place. This means the banks may charge you higher interest rates because your company is less proven. When you apply for an SBA-backed loan, you’ll qualify for a lower interest rate than you otherwise would.
The Loans Have Flexible Terms
Traditional business loans have strict repayment terms that are outlined in your loan agreement. If you fail to satisfy those terms, you’ll end up facing costly fines and high-interest payments. Most lenders won’t care if your business is struggling due to economic factors outside your control. They’ll still expect you to make your regular payments on time.
SBA-backed loans have more flexible repayment terms. They allow you to break payments up into smaller increments and lenders can even work with you if you’re dealing with a financial hardship that makes it hard for you to pay your loan on time. This lets you focus on keeping your business afloat rather than drowning in payments you can’t afford.
They’re Easier to Qualify For
When you’re just starting out, some lenders won’t even consider giving you a loan. They want to work with businesses that have a proven history of doing business in the area and can show regular and stable profits. Essentially, they’re only willing to lend money to already successful businesses.
SBA loans are much easier to qualify for, even when you’re relatively new. These are the qualifications you’ll need to satisfy:
- Must be in business for two or more years
- Must have a personal credit score of 620 or higher
- Must earn revenue of $100,000 or more per year
Provided you meet those requirements, you should be able to qualify for a loan quickly.
SBA loans are a great choice for newer and smaller companies looking to grow their business.
