5 Benefits Of An SBA Loan
Are you looking for some form of funding for your small business? There are lots of good options in this situation, including investors, bank loans, and crowdfunding, but one type of finance that should be considered is an SBA loan (especially if you have exhausted other options). The Small Business Administration (SBA) is a federal agency that provides financial backing and support for small, US-based businesses that will financially aid them in growth, business acquisition, restructuring debt, and equipment, or simply just starting up. There are several benefits to this type of loan for those that qualify – read on to discover what these are.
1. Up To $5.5 Million In Cash
One of the biggest advantages of an SBA loan is that the SBA 7(a) loan can provide up to $5.5 million in cash, which is an enormous sum that will be of great use to many small businesses for those that qualify and for this amount. This is possible because the SBA works with lenders to guarantee up to 85% of loans in case of default, so lenders feel much more comfortable lending large sums than with any other type of business loan.
2. Low-Interest Rates
Another major benefit of this type of loan over other alternatives is that you will be paying low-interest rates in comparison. How much a loan is going to cost you in the long run is always a concern for small businesses, but with an SBA loan, this is much more manageable, which can also help to reduce stress. The rate that you will pay will depend on various factors, like your credit rating, but it will always be lower than other forms of borrowing.
3. Long Repayment Terms
Repayment terms can be another major issue when borrowing money as it is not much help if you will struggle to pay the money back. SBA loans provide a payment schedule which should be manageable with a lot more cushion than other forms, including monthly payments for 25 years for real estate and 10 years for equipment financing.
4. Lower Down Payments
You will find that when you seek financing from another source, you will often have to make a downpayment, which can be difficult to manage and frustrating when you are trying to access capital. SBA loans usually require a down payment, but you will find that you need to put down a small amount when compared to other loans (which can be as high as 30%).
5. SBA Resources
In addition to the above advantages, the SBA provides resources to help small business owners to succeed and grow, which can be highly valuable. The main goal of the SBA is to help small businesses and loans often come with access to a network where you can receive training, mentorship opportunities, courses, networking events, and much more.
An SBA loan is an excellent form of funding that could help a small business to find success and reach the next level, with the above being the main benefits of this type of loan.