When you’re ready to start or expand your business, financing is one of the biggest hurdles to jump over. Turning to the Small Business Administration (SBA) for one of their SBA loans can help.
What are SBA Loans?
SBA loans are low-interest loans provided over the long term to small businesses. The SBA helps you get financing by working with trusted lenders. Your money won’t come from the SBA directly, but they help you obtain a loan by guaranteeing a portion of the SBA loans they approve, which lowers the risk for lenders.
What Kind of SBA Loans Are Available?
There are several types of SBA loans, with the 7(a) and 504 being the most popular. The first can be for up to $5 million and can be used for many reasons. The second brings in a non-profit to assist with the loan and can only be used to buy fixed assets.
How Do They Work?
Your business needs to be approved by both the SBA and the lender. It can take longer to get approved compared to other loans, but it has many pros. Low down-payments, reasonable rates, and extended payment terms are just a few. You can expect to pay interest rates starting at 6.5% and take up to 25 years to repay.
Do I Qualify for an SBA Loan?
Requirements vary by type of loan, but in general, you must have a registered business that is located and operates within the US. You must also have invested in your business somehow and have exhausted all other financing options. Ideally, they would like you to have been in business for two or more years, have a credit score of 620 or higher, and make more than $100,000 in annual revenue.
Can I Improve My Chances for Approval?
It’s not easy to be approved, but if you have all of your documents in order, have a solid business plan, have collateral, and build up your credit score, you have a better chance of getting approved. The best thing about SBA loans is that they are long-term and low-interest, providing a reliable option for your business. For all of your SBA loan needs, contact Star Capital USA.