HOW IT WORKS
WHAT IS AN SBA LOAN?
First, in simplest terms, an SBA loan is a loan in which the Small Business Administration (SBA) guarantees small business loans made by SBA-approved lenders. SBA has several types of loan programs, but the most common type of SBA loan is called a 7(a) loan. At Peoples Bank, our specialty is 7(a) loans. In short, an SBA loan is just a regular small business loan, but with a portion of it guaranteed by SBA.
IS AN SBA LOAN
RIGHT FOR MY BUSINESS?
Answering the question, “Is an SBA loan right for me?”, depends on, well, you. The SBA 7(a) program is designed to help small business borrowers who are having trouble getting a standard bank business loan. The most common stumbling blocks are needing a lower payment, not enough down payment, or not enough collateral. If this sounds like you, then an SBA loan may very well be the perfect way for you to borrow money to start or grow your business.
ADVANTAGES OF AN SBA LOAN
By using an SBA 7(a) guarantee, approved lenders are not only able to make loans to less qualified borrowers, they are often able to do so with more advantageous terms at a rate comparable to a standard bank small business loan.
Advantageous terms such as:
Longer
Amortizations
Reduced
Cashflow Requirements
Smaller Down Payments
Sometimes as little as $0
More Flexible Collateral Standards
USES FOR AN SBA LOAN
SBA 7(a) loans can be used for working capital, purchasing equipment or inventory, buying real estate, construction of new facilities, or even refinancing existing business debt.
The terms for SBA loans can be:
Up to 7 Years for Working Capital
Up to 10 Years for Machinery & Equipment
Up to 25 Years for Real Estate
IMPORTANT TO KNOW
While the advantageous financial requirements and terms of an SBA loan are geared to help your small business have access to the capital it needs, it does not replace the need for a good business plan and good credit. SBA requires that borrowers demonstrate a good track record (for existing businesses) or a sound business plan (for start-ups). Furthermore, SBA requires that the business and the principal owners have solid credit. If either of these are of concern to you, feel free to contact us and let us assess whether or not you are a candidate for an SBA loan, and if not, what you need to do to become one.
