What Small Business Owners Need To Know About SBA Loans

If you’re a small business owner and you’ve been looking for financing options, you might want to consider getting an SBA loan. When you’re running a company, adequate working capital is essential to keeping daily operations up and running, but securing high-quality, low-risk financing can sometimes seem difficult. Small Business Administration loans work differently to reduce some risk for lenders by guaranteeing most of the loan principal, making lenders more likely to give you a good deal. This means you can confidently use your loan to pay your employees, repurchase inventory, grow your business or any other operations while resting assured that you got a great loan. In fact, SBA term loans are often guaranteed by up to 80%! To learn more about these popular loan programs, read on.

There Are 3 Main Lender Types

The Small Business Administration generally goes through three different types of lenders. Some of these lenders, called infrequent participant lenders, only occasionally fund loans with the SBA and may include some banks or other institutions. Others are called certified lenders and are institutions that maintain an SBA-trained and certified staff that works with the SBA regularly. Finally, preferred lenders are certified lenders who have simply outperformed the rest and are designated by the SBA as the best of the best in lending.

There Are Numerous Loan Programs

No matter what line of work you're in, you’ll likely be able to find an SBA-guaranteed loan program to apply to. For instance, the Microloan Program offers loans for working capital or inventory and equipment purchase; Energy and Conservation Loans help businesses that create or support energy resources; the 7(a) Guaranteed Loan Program helps support start-ups and diverse needs of existing companies; and much more.

Prepare a Thorough Application

When you’re applying for an SBA-guaranteed loan, you’ll have to have your paperwork handy, since they’ll want to know thorough details about your company. For instance, they may ask for current financial statements, revenue projections, potential collateral, company size and more. Keeping detailed records can go a long way in helping you secure one of these loans.

Securing good financing is essential to keeping your small business operating smoothly, but can sometimes be tricky to find. With an SBA loan, the lender’s risk is reduced and you may be able to get access to great financing that might not otherwise have been possible. With these facts under your belt, you can feel confident about making the right loan decision for your business.

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