Business owners should always have sufficient information about their accessible financing options. Most small business owners seek funding from financial institutions, friends, external investors, and family members. Another financing option you should consider is seeking an SBA loan.
What is the SBA?
The SBA (Small Business Administration) is a government agency that offers small businesses contracting, counseling, and capital. One of their function is to help small businesses in the United States get funding to help them operate and develop. The SBA loan program usually extends funding to small companies through participating financial institutions.
What is an SBA Loan?
Although the SBA doesn’t lend money to small businesses, it establishes loan guidelines created by its partners, including credit unions. The role of this government agency is to guarantee that part of the loan issued by these establishments will be paid, hence reducing the risks for lenders.
What Do You Require to Qualify for an SBA Loan?
Typically, you must provide sufficient financial documentation about your business to the SBA and the financial institution to qualify for the loan. This helps the SBA know your eligibility and determine whether the loan suits your business and the agency. The level of qualification usually differs according to the loan. Although many SBA loans are available, the most common ones are the 7(a) and the 504. SBA loans have many benefits, including reduced interest rates and longer repayment terms.
Costs of an SBA loan
SBA loans usually have costs just like other business loans. The main cost is the interest that you must pay. Borrowers typically pay various loan fees like an appraisal, credit check, and application fees. Appraisal fee usually applies to loans collateralized by assets like real estate. Apart from the standard fees, you must also pay a guarantee fee when seeking an SBA loan.
Loans usually provide financial solutions, particularly for businesses facing financial problems or those that want to expand. Although seeking funding is an excellent way to keep your business moving, getting the most suitable loan according to your financial needs is essential. Reach out to us at Monterey Commercial Capital for the best financial solutions.