Most business owners are aware that the Small Business Administration offers a variety of loans to help small businesses expand and grow, but is an SBA loan the right fit for every situation? Here are some details about the types of SBA loans available and tips for navigating the application process.
For many small businesses, an SBA loan is a great financing option. SBA loans are guaranteed by the federal agency, which allows lenders to extend better rates and more manageable terms to small business owners.
Obtaining an SBA loan requires documentation about your business' financial position and your meeting credit score requirements. The low rates on SBA loans make them a great way for many businesses to obtain working capital to manage cash flow or expand.
The SBA offers four main types of loans:
SBA loans have some practical advantages, such as extended loan terms and amortizations. There are no balloons with those extended terms, and no renewals, which are time consuming and may have costly origination and appraisal fees. While the process may take a little more work on the front end, a business owner can save time and money in the long run by going through the approval process only once, rather than having to renew the loan every 5 years or so with a conventional loan.
SBA loans have a reputation for taking a long time to get approved and funded. But funding delays in many cases can be attributed to not providing requested documentation in a timely manner. Doing some work in advance can help expedite the process. Start by creating a simple business summary that includes information about your company:
You’ll also have to provide basic financial information:
SBA.gov is an invaluable resource for all small business owners, from established businesses to new start-ups. This website contains important details about the types of SBA loans available, how to apply, and a documentation checklist. You’ll also find helpful videos, blogs and information about almost every aspect of starting, running and growing a small business.
SBA loans are only one tool in Hancock and Whitney Bank’s business financing toolkit. Our business bankers get to know business owners and their businesses, and take a holistic approach to determining the right financial solutions for every unique situation. We’re here to help you in your business journey.
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