SBA Loan


SBA Loan

SBA Loan

An SBA loan is considered to be a type of loan for small businesses who would not be able to obtain a business loan through the traditional means of lending. An SBA loan is also a type of business loan that works with various private sector lenders that are guaranteed by the Small Business Administration. The Small Business Administration is government agency that administers loan guaranty programs and supports small business with their development and growth. An SBA loan can provide a few options for financial assistance for small businesses that are designed to meeting certain financing needs. Those financing needs could include surety bonds, equity financing, and debt financing.


An SBA loan can have some advantages and disadvantages that you may want to look at before deciding on whether a SBA loan is right for your small business. A couple of advantages of an SBA loan are there are usually relaxed credit requirements to getting a SBA loan. Most new small businesses will have a harder time getting the capital through the means of traditional lending to start or grow their companies. An SBA loan lending company can help those types of small business owners obtain the capital they would need for their business. An SBA loan will come with a premium fee through interest rates and other additional fees to access the capital but most small business owners would rather be funded through these means than not all. Another advantage of an SBA loan is this type of loan has flexible loan terms. An SBA loan can usually be repaid over a longer period of time to help reduce the monthly payment. An SBA loan lending company has the flexibility to provide certain terms that most regular banks or loan companies could offer. An SBA loan can also offer smaller loans with no guarantee from the borrower. A couple of disadvantages of an SBA loan are there are higher interest rates associated with an SBA loan. An SBA loan lending company will charge a higher interest rate because of the credit risk of their customer base. An SBA loan will typically charge a prime rate plus a premium rate which depends on how much is borrowed. Another disadvantage of an SBA loan is some SBA loan lending companies are not regulated by some state or federal governments. This allows the SBA loan lending company to conduct business any way they wish and you could find yourself or your business in a bit of a predicament if you don’t agree with the way they follow their lending practices. But in the end, the Small Business Administration has certain rules that need to be followed and if those SBA loan lending companies don’t follow those rules, then the SBA can revoke their lending capabilities. You will need to contact the Small Business Administration if you feel this might be the best option for you.