6 Benefits of SBA Loans
SBA loans are a type of loan backed by the U.S. Small Business Administration. Thanks to this excellent loan option, small businesses receive a number of benefits that aren’t available anywhere else.
1. Extremely Low Interest Rates
It’s almost impossible to beat the interest rates of SBA loans, even when compared to traditional term loans. You get the most bang for your buck, allowing you to invest revenue into your business instead of paying tons of interest. Low interest makes it easier to afford a larger loan amount for real estate or other assets.
2. High Capital Amounts
Another advantage of these government-backed loans is the amount of capital you can qualify for. Businesses that qualify for SBA financing can receive up to $5.5 million, depending on the need. This is a huge help in purchasing heavy machinery or manufacturing equipment.
3. Comfortable Repayment Terms
SBA financing allows for significant flexibility when it comes to both the length of time you have to repay the loan and the payment schedule. If you need to stretch real estate payments out to 25 years, it’s not a problem. This can put construction of your own headquarters within reach. You can also use an SBA loan to finance expansions, renovations and interior redesign.
Does your company have a seasonal client base that keep you busier during certain times of the year? You can arrange loan payments on a quarterly or semi-annual basis if needed. That way you keep up with payments without jeopardizing your cash flow.
4. Accessible Financing
Banks have far lower risk with SBA loans than other types of long-term loans. The government backs up to 85% of the loan’s value, meaning that if something goes wrong, the bank doesn’t have to worry about losing lots of money. With this reduced risk, getting approved is much easier for your company, even if you don’t have the most solid cash flow.
5. Lower Down Payments
Whether buying equipment, vehicles or real estate, you generally need to make a down payment in addition to loan financing. This amount is often 20% of the total price, but SBA loans allow you to make down payments of only 10%. That way you can buy what you need even if you don’t have a huge bank account.
6. Flexibility for Business Needs
Another perk of an SBA loan is being free to use the money for whatever you need. Working capital SBA loans give you financing for software, computer systems, furniture, marketing cost, POS systems or pretty much anything else you envision for your business.
