An SBA loan is a commercial loan offered through a bank or authorized lender. SBA Loans are a tried-and-true method of franchise financing, created to help entrepreneurs by offering low-interest rates and no balloon payments, with a guarantee by the SBA. A common misconception is that the Small Business Association makes direct loans to entrepreneurs to kickstart their business(es). This is not the case. Instead, the SBA makes a guarantee to banks and lenders for the money they lend to small businesses.
SBA loans also alleviate the risk associated with lending money to business owners and entrepreneurs, who may not qualify for traditional loans. The benefits of SBA loans for borrowers are many and include:
To qualify for an SBA loan you must have:
The financing amounts range anywhere from $25k to $5 million, and there are several options, including the following:
Compared to personal loans, many SBA loans are a breeze. The turnaround time for a personal loan is within the same range as the SBA loans listed above. However, unlike most SBA loans, collateral is usually required for personal loans.
The average time to be approved for an SBA loan is anywhere from 45 to 90 days. However, in some cases, it can exceed that.
Before applying for an SBA loan, make sure you have the following documents available and ready to present:
For an existing business, you will need to also provide the following in addition to the above:
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