Becoming a small business owner is one of the most daunting, yet rewarding, endeavors you can take on. While the journey of planning through development and launch to eventual expansion is fraught with both opportunities and challenges, there are valuable tools designed to support and empower you.
When you’re ready to take your work to the next level, a United States Small Business Administration (SBA) loan may be the catalyst for your growth.
What are SBA loans?
Sometimes, a bank wants to issue a loan outside of traditional credit standards. For example, suppose a founder hopes to launch a startup but doesn’t have enough collateral to secure additional funding. This is where the SBA, and SBA loans, come in.
Backed by the federal government, SBA loans are a financing solution for a variety of professional ventures such as acquiring a company, growing a business or funding a startup. Because these loans are issued through a government agency moreover, one dedicated to aiding entrepreneurs or mom-and-pop shops specifically there are numerous advantages for both customers and banks to offer this type of loan over traditional business loans.
Why are SBA loans the right choice for prospective small business owners?
You have invested your time and money into a prospective venture, registered your business as a legal for-profit enterprise and are located and operating in the United States or a U.S. territory you are likely eligible for an SBA loan.
Compared to conventional loans, SBA loans have more favorable terms and conditions for entrepreneurs. Since these advances are backed by the federal government, and include an SBA loan guarantee, they have broad eligibility requirements that vastly increase individuals’ access to funding. This guarantee also reduces lenders’ risk, enabling financial institutions to offer longer repayment terms, making this type of credit more attractive to sole proprietors.
As a small or family business owner, this ultimately means more cash in your pocket to chase your career goals. From lower monthly payments and more manageable debt, the flexibility of these loans is a huge benefit, giving you the capacity to further invest in your profession, foster growth and maintain stability something particularly beneficial during the early stages of starting a new endeavor or during an expansion period.
As you plan for your future, know that SBA loans can open the doors to additional financing options too. The added security of the SBA guarantee means that people who may not qualify for a traditional allowance can still access capital. Even if you have a limited credit history or lack collateral, SBA loans can offer you reassurance. Successfully obtaining and repaying an SBA loan now will even build your credit profile. Improving your creditworthiness and strengthening your financial foundation will make it easier to secure future funding, whether it be for further growth or to weather unexpected challenges.
In addition to financial assistance, these loans come with extensive support services to guide you on your professional journey. From career counseling to training programs and marketing strategies to operational improvements, there are a plethora of services available through local resources centers, such as the SBDC, SCORE, and local chamber of commerce offices. If you aren’t sure that an SBA loan is the right choice for you, visit one of these centers they will happily guide you through the process and assist with the necessary paperwork for applications.
What types of SBA loans are available?
From $500 to $5 million, borrowers can acquire funding for a variety of expenses whether it be a small or large need. Most community banks, such as Tompkins Community Bank , offer the following types of SBA loans:
- 7(a) Loans: SBA 7(a) Loans are the most common SBA loans and provide up to $5 million for working capital expenses. Whether you’re looking to expand your business, acquire new equipment, invest in real estate or subsidize your payroll, this loan is a flexible option for owners.
- SBA Express Loans: SBA Express Loans offer up to $500,000 and have an expedited review process for quicker access to funds in fact, these loans are typically approved within 36 hours.
- 504 Loans: 504 Loans support small business expansions and modernization through long-term fixed-rate financing. Providing up to $5.5 million in funding, these loans can be used for constructing or purchasing buildings, land or large pieces of equipment or machinery.
Whether you are beginning your career journey, launching a new startup or expanding your offerings, SBA loans provide a unique combination of accessibility and support that can help you achieve your goals.
Paula Valencia is an SBA Loan Manager at Tompkins Community Bank. Copyright © 2024 BridgeTower Media. All Rights Reserved.
Most Popular
Comments / 0