When a small business loan is guaranteed by the SBA, it tends to have a lower interest rate than other types of small business funding.
The federal government created the Small Business Administration (SBA) to help support small businesses. One way the agency supports small businesses is through SBA loans. SBA loans aren’t actually offered by the SBA. Instead, the SBA offers loan guarantees to financial institutions that issue SBA loans. There are a variety of SBA loan products, including the SBA 504, SBA 7(a), and the SBA Express.
An SBA loan is probably the best option for your business for one simple reason: they usually have the lowest interest rates. Here are the main points:
If you are interested in an SBA loan, you should begin the process sooner rather than later. This is because the application process for an SBA loan can be fairly lengthy, with many potential borrowers waiting several months to see if they qualify.
Like we said earlier, there are a variety of SBA loans to choose from. Here’s a quick look at a few of the most popular types of SBA loans:
The main advantage of an SBA loan is the low interest rate. Also, since there are a variety of SBA loan types to choose from, they can be used for many different kinds of business purposes.
Like we mentioned earlier, it takes longer to get approved for an SBA loan than many other types of small business financing. If you need the money now, this likely won’t be your best funding option. These loans occasionally require collateral.
Also, if you get a years-long loan term, you might not be able to take on another loan during that period.
If you have the time to wait on an approval decision, an SBA loan can be a solid solution for small business funding.