ASK FOR SCORE: Need financing for your small business? SBA Loan Programs Could Be The Answer Business and Economy
Lack of capital is one of the biggest hurdles for an entrepreneur pulling the trigger on a new business venture or for a small business owner looking to take their business to the next level.
Because insufficient capital is such a common challenge, it’s also common for business owners to take out loans to get the cash they need to start or grow. If you fall into this category but are having difficulty obtaining financing, applying for a loan through the US Small Business Administration Loan Program may be a good step.
Lenders assess the risk of a potential borrower and the borrower’s business before deciding to grant a loan. If you’ve been hit with bad credit in the past or have limited credit, you may have a hard time getting the financing you need.
This is where the SBA loan program comes in. Through this program, businesses can receive a loan guaranteed by the SBA. The SBA does not lend money directly to small business owners. Instead, it acts as an intermediary between the lender and the borrower to facilitate the loan. SBA backing creates less risk on the part of the lender, making them more willing to lend.
Several options, advantages
SBA guaranteed loans come in many forms. The most common is the 7 (a) loan. With the 7 (a) loan, a business can borrow a maximum of $ 5 million. These loans guarantee up to 85% of the amount borrowed if you borrow $ 150,000 or less. If you borrow more, the SBA guarantees up to 75%. This makes you a much more attractive borrower for a bank. Funds borrowed through a 7 (a) loan can be used for working capital, expansion and equipment purchases.