SBA Loan

Michelle Adams

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The Small Business Administration is a United States Government agency that promotes the growth of small businesses in the domestic market. The SBA’s primary purpose is to help small businesses in setting up and running their firms. Instead of providing loans directly, the SBA works with traditional lenders to provide SBA guaranteed finance. The SBA ensures part of your loan, which makes lending to you a more attractive option for commercial lenders who may be concerned about your ability to pay back the principal amount. The SBA is a type of co-signer for the loan; if you have limited credit or start-up capital this can be easier than receiving a traditional loan. This reduction in risk encourages lenders to provide capital to small businesses around the country.

Why Get an SBA Loan?

An SBA loan can serve a variety of different purposes for your small business needs. Small Business Administration Loans are provided through financial institutions that have been SBA approved and are partially guaranteed by the U.S. Small Business Administration. These loans can serve a variety of different purposes and can assist you with growing your enterprise much faster than you would be able to do without a loan.

Some of the common reasons to obtain an SBA loan include:

To Start a New Business – Many potential small business owners have great ideas for a new venture but lack the funding and capital on hand to bring their vision to life. With funding from an SBA loan, it is easier than ever to get started with a business concept and to obtain the required capital to fund the business’s operating costs and start-up materials.

Purchasing Inventory – Even after starting a new business, many business owners find themselves strapped for available funding that can be used for purchasing inventory. Instead of closing the doors when inventory is low, business owners can continue business operations with a small business loan that can be used for obtaining additional products.

Purchasing Equipment – Many businesses require specific equipment in order to properly operate. Without this equipment on hand, it can be challenging to get the business operating as it should. A small business loan can go towards the purchase of technology, software, hardware, machinery, computers, servers, and other related equipment.

Cover Operating Expenses – When it comes to covering day to day operating expenses, a small business loan can provide the perfect solution. From paying for utilities to providing capital for payroll, funding can help a small business owner to meet their day to day operating requirements.

SBA Loan

What Can an SBA Loan Be Used For?

SBA loans can be used for a wide variety of operating costs for your business. A popular SBA loan is called a 7(a) loan — it offers applicants up to $5m in capital for their business. It is aimed at helping business owners with starting or expanding a business in the United States. The 7(a) is by far the most flexible option as it allows the funds to be used at the discretion of the business owner. Other types of financing are also possible through the SBA. One of these is an export assistance loan intended to help companies expand their exporting capabilities. Another is CAPLine financing, which primarily finances expenses associated with seasonal industries. In addition, disaster loans are available for businesses that experience substantial damages by official disasters within the United States.

CDC/504 loans

CDC/504 loans provided through the Small Business Administration offer to fund assets such as new equipment, new machinery, and technology. This type of loan is aimed at helping the community as a whole by providing much-needed funding to businesses across a variety of different industries. This loan is a very desirable one due to the fact that it offers fixed-rate financing to the small business owner. The funds obtained with this loan are used to purchase assets which go towards street improved utilities, commercial mortgages, and other related ventures. A small business obtaining this type of funding can be run for profit but should not be used for real estate investing.

SBA Microloans

With an SBA microloan, businesses can obtain funding for different purposes and in smaller amounts. SBA microloans and the SBA Express program serve businesses with varying business needs. The SBA microloan can be used for a variety of different smaller purchases including purchasing furniture, purchasing machinery, and purchasing supplies and inventory. The microloan is not available to be used for paying off current debt or for the purpose of buying real estate. The maximum amount available under the microloan program is $50,000.

Small Business Loans For Women

Diversification in business is encouraged by The Small Business Administration through the creation of small business loans for women. The SBA Office for Women’s Business Ownership provides a wide range of information and resources for women who are seeking funding for the establishment of a new business. Another federal advisory body addressing the economic issues affecting women is the National Women’s Business Council.

Small businesses are the driving force of the economy and they create more than 80 percent of new job opportunities. Owning and running a small business is now more possible than in years prior due to the variety of loans available to small business owners.

What’s the Process?

In order to apply for an SBA loan, you will need extensive documentation. Many lenders will require you to have some of the following documents in order to apply for the loan:

  • Business history
  • Tax Returns
  • Previous loan applications
  • Ownership information
  • Information on each principal
  • Financial statements
  • Profit statements
  • Business licenses

There is also a significant chance you will need additional documentation — you can find this by contacting your lender directly. Once you hand in all necessary documentation to your lender, they will send it to the SBA for a final review.

SBA Loan

Should I Apply for an SBA Loan?

An SBA Loan can be a useful option for a business owner with limited credit history. It allows many small businesses access to traditional lenders that would otherwise not be possible. On the other hand, the application is lengthy and complicated — many forms are required and it can take months for the SBA to review your application. We offer low-rate affordable solutions that can get you working capital quickly. Our entire application is streamlined through an online portal, which ensures you get the money you need within a matter of days. In addition, we make our decisions based off easy-to-find revenue data which makes the process as painless as possible. Apply online today to get the financing you need to start or expand your business!

An Alternative to an SBA Loan

There are alternatives to a traditional loan obtained through the Small Business Administration. Businesses also have the option to seek funding from a business line of credit. A business line of credit offers flexibility that is not found with a standard, term loan. With a business line of credit, a business owner has the opportunity to obtain access to a specific credit limit on a revolving basis. Interest is paid only on the portion of the funding that is being used. When the money is withdrawn and the funds are repaid, a new credit amount is made available with the same terms in place. The period of the business line of credit is usually available for between 1 to 2 to years and then it is renewed.

Better Interest Rates

A business line of credit works similarly to a credit card and provides funding for a wide range of different expenses. From purchasing inventory to managing cash flow or paying for surprise expenses, this funding source is an ideal solution. Unlike a traditional SBA loan, interest doesn’t accrue the moment the funds are made available. Only after the funds have been accessed does interest begin to accrue on the amount that was used. An added advantage of using a business line of credit to obtain funding is that the interest rate on business lines of credit are typically much lower than on traditional types of loans.

Minimum Credit Required

Unlike a loan obtained in partnership with the Small Business Administration, a business line of credit has much less stringent credit requirements. In cases where the line of credit is smaller, no credit is often needed in order to qualify. In addition, no collateral is usually required either which makes this funding source an appealing option for many new businesses. No matter what maturity level your business might be, you can benefit from considering a small business line of credit to help you meet your financial goals.

What qualifications are needed?

Prior to applying for a small business line of credit, you may be wondering what exact qualifications are required. Most lenders like traditional bans will want businesses to have stable revenue and a few years of history. However online lenders have less strict requirements and are able to work with start-ups and newer businesses to get them the funding they need.

Comparing an SBA Loan and Business Line of Credit

If you are trying to find the best possible type of funding for your business, you may want to compare an SBA loan with a business line of credit. Most traditional loans obtained with the help of the Small Business Administration will require strong revenue, a higher than average credit score, and larger credit lines may require collateral. In the event that payments on the loan aren’t made on a collateral backed loan, the lender has a legal right to seize the assets. Applying for an SBA loan will require a lot of documentation including both business and personal tax returns, business financial statements, bank account information, balance sheets, and profit and loss statements.

Online Business Line of Credit Lenders

Although the process of obtaining an SBA backed loan can be a little more rigorous, a business line of credit obtained from online credit lenders usually offers funding without all of those requirements. To qualify for a business line of credit with an online lender, the requirements usually include being in business for at least six months and demonstrating at least $25,000 in annual revenue. Many lenders don’t have a minimum credit requirement but in general, a credit score of at least 500 or higher is ideal.

Applying for funding online is by far one of the easiest ways of obtaining financing for your small business. With the flexibility of applying from any location combined with the ability to simply upload required documentation, small businesses are finding it easier than ever to get the funding they need without the hassle. Business Line of Credit Hub makes it easy to apply for a small business line of credit through our secure online portal. We have made it possible for small business owners in need of funding to get access to the lenders who can provide loans within a very short amount of time.

About Business Line of Credit Hub

Business Line of Credit Hub is committed to providing the best resources, information, and direct access to lenders who are available to offer competitive rates on small business loans. If you are a small business owner in need of funding, there is no better time than the present to make use of the wide range of options available to you. A business line of credit could help your business expand exponentially and reach new heights of success and profitability. We are dedicated to connecting you with the lenders that can make that happen. Our secure and protected online form allows you to apply for funding and receive a response within minutes. We operate with the highest levels of trust and transparency ensuring the best process for your small business funding needs.

Browse our website to view additional articles related to funding your enterprise. We have compiled a list of relevant topics that can prove helpful in your search for the best loan solutions for your business. When you are ready to apply simply fill out our short online form to get started today!