Did you know that the SBA is currently set up to triple loan amounts for businesses that were affected by Covid? Your business might be eligible for SBA loans, and you might not realize it. We have put together this guide to share what SBA loans are and to teach you more about qualifying for one.
Keep reading to learn the ins and outs of SBA small business loans.
What Are SBA Loans?
SBA loans are loans from the Small Business Administration given to entrepreneurs to start their business or grow their business. In some cases, the Small Business Administration will administer the loan themselves, and in other cases, one of the lenders from their approved network will approve and disperse the loan.
If you would instead not apply through the SBA site because it looks confusing, check out these top SBA lenders to help you with the application process.
Types of SBA Loans
You have six different options available when it comes to SBA loans. These include:
- 7(a) loans
- CDC/504 loans
- Disaster loans
- Export loans
The most popular of the six options is the 7(a) loan program because it has a much more extended repayment period and lowers interest rates than the other SBA loan options. The interest rate is usually between 7.5-10% for 7(a) loans.
Applying for a Loan
Most SBA loan programs have similar application processes and criteria. The exception to this is the 7(a) Express loans. The essential measures are having a credit score of at least 680, have a profitable business that has been up and running for a minimum of two years, no debt obligations owed to the United States government, no business liens, no bankruptcies, and a down payment between 10% to 30% of the loan.
Some lenders will require collateral to approve your loan. The processing time and the response for their decision will depend on the type of loan you are applying for. For example, 7(a) Express loans will usually be processed within 36 hours, while traditional 7(a) loans take months before the funds are dispersed.
Consider Talking to an Adviser
If you feel a little overwhelmed with the entire process, we recommend contacting a Small Business Development Center in your local area to arrange a meeting with an SBA adviser. They can answer any questions you have and will also help clear up any concerns.
Another option is to look online in the SBA’s SCORE program.
Feeling Like an SBA Loans Pro?
We hope that now that you know what SBA loans are, the different loan options, and how you can qualify for a loan, you can make an informed decision to help your business financially moving forward.
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