SBA Loans and Your Small Business: A Perfect Match?

Exciting things happen when you have a plan to start your own business. Whether you decide to provide services or goods, the prospect of being your own boss and running things your way is thrilling. With no boss to answer to, things will be much easier – or will they? Thinking things through when planning a business is crucial to your success. Most new businesses need an influx of money to get started. Even if it’s a small amount for equipment or office space, it’s still money you need to secure from somewhere. That’s where SBA loans come in handy. They lend money to small businesses to get them up and running.


What Is the SBA?


The U.S. Small Business Administration (SBA) is a branch of the government created to encourage small business growth by lending money at ultra-low interest rates. The payments are usually extended out over a more extended period than traditional loans to help keep costs down for fledgling owners.


What Are the Qualifications?


Not just anyone can qualify for SBA loans. While they are typically easier to obtain, they still have to consider things like debt to income ratio and creditworthiness. Beyond that, the representative may want to get a copy of your business plan and projected profit and loss.


What Are the Benefits to SBA Loans?


For starters, the SBA can lend money at the lowest interest rate. You won’t find anything with that low of an interest rate with an extended repayment plan. They also offer three different types of loans for varying needs and degrees of capital.


  • SBA 7(a) loan may get you over $5 million and give you up to seven years in repayment terms
  • For real estate and equipment/machinery, the CDC/504 loan will give you 25 years for repayment
  • Smaller or micro-loans can get you amounts up to $500,000 and give you six years to repay it


Having a choice in the type of loan you need gives you some flexibility in your monthly business budget.


At the end of the day, the SBA was created to help small businesses succeed. While they can’t guarantee your venture will succeed, they can help be a part of it by giving you access to loans of varying amounts at fees and repayment terms you can make work. SBA loans are, therefore, may be the perfect way to get that vision of yours out of your head and up into practice.

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