SBA loans are financing options for small businesses. These loans aren’t provided by the government directly, but they are backed by the Small Business Administration. Because the SBA offers lenders a repayment guarantee, those lenders can give your small business some incredible terms. How can an SBA loan help your company?

Ways an SBA Loan Can Benefit Your Company

There are a variety of advantages to SBA loans compared to traditional financing. With the capital you get from a loan, you can purchase equipment, inventory, computer systems, real estate and many other items. You can also invest in new construction, remodel your office or take care of other expansion goals.

A major benefit of SBA financing is that you can qualify for lower interest rates and longer repayment terms. This is only possible because of government backing; many small businesses don’t meet the credit score requirements for conventional loans. SBA loan terms are among the best in the industry, potentially saving you many thousands of dollars on high-value purchases.

Another advantage of this financing is being able to grow your business without putting your capital at risk. Investing in business growth is vital for healthy finances. You need to reach goals such as purchasing equipment. SBA loans make it possible, and you don’t have to worry about hidden fees or excessive interest payments.

Options for SBA Financing

You can choose from several different options when applying for SBA financing. Most of these loans are designed as long-term financing, which offers lower interest rates than short-term funding.

SBA 7(a) loans are a popular product with small business owners. These loans have benefits for cash flow, providing lower down payments compared to other options. You can use an SBA 7(a) loan for many small-to-medium purchases, such as computers, point-of-sale systems, middle-market equipment, business equipment and many remodeling projects.

SBA 504 loans are larger funding options with exceptional interest rates. They’re common for large-scale expansion projects, construction projects, real estate purchases and heavy machinery purchases. These are also called Certified Development Company loans, or CDC loans.

SBA Express loans provide flexible capital. They’re similar to working capital loans, but they have a long-term design rather than short terms. With working capital, your business has the freedom to invest in a variety of improvements or goals, including hiring additional employees, investing in website development or buying some types of equipment/technology.

Some lenders also offer microloans. These smaller loan products can help startups or relatively new businesses with the essentials.