SBA loans are designed to provide financing for the purchase of fixed assets like real estate and machinery, usually at below-market rates.
Small Business Administration (SBA) loans are guaranteed by the SBA itself and issued by lenders that participate in the program. There are several types of SBA loans, but its 7(a) loan program is the most popular. SBA loans typically have lower interest rates and longer repayment terms than other small business loans. However, it is difficult to qualify for an SBA loan, the process and approval time can be lengthy, and collateral will likely be required.
Since the loans are guaranteed by a federal agency, lenders have more flexibility with loan terms and interest rates. SBA loans often have single-digit interest rates and repayment terms of 7-10 years (and even up to 25 years for real estate purchases). This helps keep business owners’ monthly payments low, freeing up more of their capital to invest back into their business.
SBA loans generally require more paperwork and documentation than a standard business loan. You should expect to provide comprehensive personal and business tax and financial records, as well as items like a business plan and a business debt schedule. Your credit score will also be taken into account, with the SBA generally looking for scores above 680.
Since SBA loans require additional time and paperwork, they are not approved and funded as quickly as a traditional business loan. Regardless, the best time to get a small business loan is always before your business needs it. That way, you’ll be able to do your research, make a funding decision confidently, and get the best rates available.
StreetShares provides the best options for getting the cash you need when you need it most through our collateral-free lending options.
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