The Small Business Administration was first established in the U.S. in 1953. Since that time, it has worked to help small business owners acquire financing for a lower rate than more traditional bank loans.

If you have a business idea that needs funding or want to grow your existing business, acquiring a loan from the SBA is a smart move. However, before applying for this loan option, there are several things to keep in mind. If you want to learn more, keep reading.  

The SBA Doesn’t Actually Offer Loans

It’s worth noting that it is not the SBA that will actually give you a loan. Instead, they create the rules, and then commercial lenders will give the funds to a borrower.

This is important because the SBA guarantees the loan. It provides an incentive for banks and other lenders to provide you with the requested funds.

SBA Loan Features

The most popular type is the 7(a) program when it comes to SBA loan options. It includes all types of lines of credit and term loan options.

Through the years, the SBA has added a higher level of flexibility to the programs and the products offered so that borrowers and lenders have more choices and ensure the money gets to them faster. If you are interested in an SBA loan, it is good to get to know about the type you need and the terms attached to it. In most cases, it will be much more appealing than what a traditional bank or similar lender is willing to offer.  

SBA Loan Benefits

When you borrow through SBA loans, you usually receive a much longer pay-back period than what is offered with more traditional loans. Also, the down payments are usually lower than what banks require for typical commercial loans. The requirements for collateral are usually less demanding, as well. Altogether, this makes a much more appealing loan product.

Getting an SBA Loan

As a business owner, you have a lot of factors to consider. Be sure to look into the SBA loan program, which will help ensure you get the funding your business needs to start, expand, or continue on a growth trajectory. Being informed is the best way to decide if a loan from the SBA is right for your business and your needs. Don’t underestimate these loans, but do remember they are competitive, so be sure to put your best foot forward.