• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Submissions
  • About Us
  • Contact Us
  • Jun 6, 2023
  • Startup
    • Creating a Plan
    • Funding a Startup
    • Franchise Center
    • Getting Your Office Ready
    • Making Your Business Official
    • Marketing Your New Business
    • Personal Readiness
  • Run & Grow
    • Customer Service
    • Human Resources
    • Innovation
    • Legal
    • Operations
    • Risk Management
  • Leadership
    • Best Practices
    • Communication
    • Green Initiatives
    • Open Culture
    • Strategic Planning
    • People Skills
  • Sales & Marketing
    • Advertising and Lead Generation
    • Marketing Innovations
    • Marketing Plans
    • Online Marketing
    • Relationships
    • Sales Activities
  • Finance
    • Budgeting and Personal Finance
    • Payments and Collections
    • Tax and Accounting
    • Pricing Strategy
    • Working with Investors
    • Working with Lenders
  • Tech
    • eCommerce
    • Hardware
    • Software
    • Security
    • Tech Reviews
    • Telecom
  • Shop

SmallBizClub

Helping You Succeed

taxbandits banner
Home / Startup / Funding a Startup / How to Grow a Business Using SBA Loans
How to Grow a Business Using SBA Loans

How to Grow a Business Using SBA Loans

2279 Views

Jul 12, 2013 By Biz2Credit.com

SBA loans are one of the best financing resources for small businesses hoping to grow in the United States. Small businesses who might not otherwise qualify for traditional bank loans can benefit from the SBA’s loan guarantee program. The SBA can help small businesses increase cash flow and take on new business.

 
Types of SBA Loans
 
The SBA guarantees many of the same type of loans that banks issue directly through custom SBA loan programs. Term debt in the form of real estate and equipment purchases are mostly financed with SBA 7(a) or 504 loan programs. Lines of credit are made available with ‘SBA Express loans’ and SBA CapLines.
 
SBA Loans vs. Traditional Loans
 
Business owners can use SBA loans to effectively manage their business cash flow. The SBA lending program is a major stimulus for business growth in the US. SBA business loans are being substituted with traditional commercial loans, rendering special benefits to the borrower.
 
The SBA agency provides extended term loans—to the benefit of small business owners. For example, real estate can be amortized within a 25 year period with SBA loans while banks allow only 20 year amortization. Equipment purchase can be amortized within 7 to 10 years while traditional bank financing needs 5 year period to be amortized.
 
The SBA’s lower collateral requirement is yet another advantage. The agency has significantly higher loan-to-value ratios as compared to traditional commercial loans.
 
Chances of Receiving SBA Loans
 
The borrower can increase their chance of receiving an SBA loan by approaching several lending institutions. It is necessary to find the right financier and work with bankers who understand your industry well. It is also important to develop a comprehensive business plan and explain why their business is set up for financial success. Also, calculate the possible business risks and offer mitigating measures. The business owner should also be realistic about financial projections and provide solutions for the risks associated with projections. And as far as the repayment is concerned, alternative repayment modes can be suggested by borrowers. A good credit history also significantly increases a business owner’s odds of receiving an SBA loan.
 
Other Considerations
 
Your business plan should be thoughtful and thorough. Lenders consider many factors—not just financial statements and business projections. Every bank is different so be sure to do your homework and submit information that is detailed and concentrated on what the lender is looking for. It can also be important to take future financial needs into consideration and plan out loan applications accordingly.
 
This article was originally published by Biz2Credit
 

Filed Under: Funding a Startup Tagged With: Banking, Biz2Credit, Investors and Lenders, Small Business Administration

Biz2Credit.com

Biz2Credit.com

Biz2Credit.com is an online, small business platform that matches entrepreneurs with credit solutions based on their business preferences in a safe and price-transparent environment. Biz2Credit is a market leader with more than 1,100 lenders, over $800 million in funding, and over 1.6 million SMB users in the U.S.

Related Posts

  • How to Choose the Right Bank for Your Rental Property Business
  • Practical Advice for Businesses Looking for a Singapore Banking Partner
  • Eliminating Costly Errors in the Banking Sector: How RPA Can Help

Primary Sidebar

Random

What questions can I legally ask a potential tenant for a home I want to rent?

Oct 28, 2013 By Bill Wortman

5 Ways to Successfully Build Your Network

Jul 11, 2014 By SmallBizClub

start-now-to-save-on-small-business-tax-preparation-for-2014

Must-Haves for 5 Small Business Industries

Nov 27, 2022 By Justin Weinger

How to Optimize Your Content for Google Answer Boxes

Jan 2, 2020 By SEER Interactive

Non-standard Copyrights: The Scope of Protection is Expanding

Oct 26, 2021 By William Scott Goldman

Footer

About Us

Small Biz Club is the premier destination for small business owners and entrepreneurs. To succeed in business, you have to constantly learn about new things, evaluate what you’re doing, and look for ways to improve—that’s what we’re here to help you do.

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Copyright © 2023 by Tarkenton Institute, Inc. All Rights Reserved | Terms | Privacy