By Matthew Hurley
Have you been taking the time to learn more about SBA loans? Are you under the impression that this type of loan could be perfect for your company? Do you want to move forward with the application process in the near future?
While there is a lot to learn about SBA loans, there are also many places to turn for help.
For instance, if you search online, it won’t be long before you’re gathering all the data you need to make a more informed decision.
You can visit the Small Business Administration website for information on everything from loan programs to how to apply (and much more).
It may sound like a challenge to apply for an SBA loan, but most people find that they are able to do so once they have the right plan in place. You simply need to learn more about these types of loans, so that you make the right decisions along the way.
Here are some of the many points to keep in mind:
You Can Use the Funds in Many Ways
Many people are under the impression that the SBA tells you exactly how you are allowed to use the funds from a loan.
While this may be true to a certain extent, they don’t get in the way by telling you how to use the money.
Instead, you can use the funds for any business purpose imaginable, such as: purchasing equipment or inventory, working capital, buying real estate, refinancing debt, or acquiring another business.
If it has anything to do with your business, it’s safe to assume that you can use your SBA loan funds as you see fit.
Borrow a Little or Borrow a lot
Let’s face it: every company is in a different position in regards to how much money they need to borrow.
On the low end, SBA loans typically start at $5,000. This may be more than enough for you to reach your goals.
However, if you require more cash, you can push the limit all the way up to $5 million.
It doesn’t matter how much money you need, there is a good chance that an SBA loan will be able to give you exactly what you require.
Flexible Loan Term
With some business loans, the repayment term is anything but flexible. This isn’t the case with an SBA loan, as the term can range from 5 to 25 years.
If you want to get the money repaid as quickly as possible, opt for five years or something close to that.
However, if you want the lowest possible payment, a 25 year term loan may be the way to go.
Tip: you can always pay back the money faster than expected if you have the ability to do so.
Competitive Interest Rate
There is a lot to think about when applying for any type of business loan. One of the most important details is the interest rate.
You don’t want to get stuck with a higher than average rate, as this will cost you a lot of money as the years go by.
The average starting rate of an SBA loan is 6.5 percent, which is competitive when compared to other types of products.
If you want to secure the lowest possible interest rate, make sure your credit score is as high as possible.
Top Benefits of an SBA Loan
Now that we’ve discussed some of the most important points of an SBA loan, let’s look over the top benefits:
- Low down payment, meaning that more people can take advantage
- Suitable for many business purposes
- Long repayment terms make it possible to fit an SBA loan payment into your current budget
These may not be the only benefits of an SBA loan, but they are among those that could have you excited about taking advantage.
You should never assume that this choice is right for your business. Instead, you should take the time to learn more about this loan product, as well as any others that are available to you.
What are your thoughts on securing an SBA loan in the near future? Have you done this in the past? Share your personal experiences and other thoughts in the comment section below.
Matthew Hurley is an entrepreneur whose worked with small and large business alike to secure loans.