SBA Loan

Are you a small business looking for affordable financing? If so, the Small Business Administration (SBA) may be able to help. Acquiring an SBA loan can be a highly involved process, but the benefits far outweigh the costs.

But what is the SBA?

It's a government agency that functions as a guarantor for business loans that are intended to encourage and stimulate business development. Whether you're looking to buy a new business or expand your existing enterprise, an SBA loan is an excellent way of obtaining low interest, long-term financing.

Many SBA loans are expected to go towards acquiring materials, equipment, or property necessary to carry out the expansion of an existing, successful business. Most of these applicants have a business that-despite bringing in steady income-lacks in capital.

Banks and other financial concerns offer SBA loans to businesses that will successfully apply it towards ensuring the long-term success of the business. For this reason, qualifications for an SBA loan differ from those of other types of loans-in particular, there is less of a burden on the borrower to demonstrate collateral and cash assets. When the SBA helps your business acquire a loan, it is understood that the you will pay back the loan on a lengthy schedule of smaller payments.

Your best tool throughout the application process for a loan guaranteed by the SBA is a solid business plan-such as a franchise-which demonstrates a comprehensive, realistic model for establishing or maintaining a profitable, successful business.

You should also keep in mind that the SBA is not the entity providing funds to the business. The SBA's participation in the loan process is supposed to make lenders more comfortable loaning to a business that has a promising future.

With its guarantee of up to 80% of a loan, the SBA's participation in the loan process makes banks feel more comfortable offering a lower, more manageable interest rate than they would otherwise. Other advantages include the waiving of certain fees, and depending on the type of loan program a business is applying for, the process can be very swift.

Business owners do not contact the SBA independently, but rather banks and other lending companies will arrange the loan if they think a borrower can meet the requirements for an SBA loan.

The application process varies depending on the type of SBA loan being sought, and in fact there are several types of loan programs. The rates and limits also vary based on the loan program in question as well as particular lenders' decisions and the business plan involved. Your lender can help you determine which program you best qualify for, or you can investigate more at the SBA's homepage: www.sba.gov.