When you need financing for your business, obtaining it from an SBA lender can be a great option. The benefits of SBA lending are typically lower interest rates, flexible repayment options, and the fact that approval may be easier than when seeking traditional financing. The best lenders will also have knowledgeable staff members who know what it takes to succeed in the industry.

SBA loans are small-business loans granted by participating lenders and guaranteed in part by the U.S. Small Business Administration (SBA). These loans have certain standards to be aware of, but their flexible terms and low interest rates can make using an SBA loan the ideal way to fund your business.

What is an SBA Loan?

An SBA loan is a federal small-business loan is offered by a lending institution but guaranteed by the government. You apply for an SBA loan through your lender. The lender then applies for a guarantee on the loan through the SBA.

7(a) Guaranteed Loan Program

The 7(a) General Business Loan Guarantee Program is the SBA’s main business lending program. It’s often utilized for start-up businesses and to address different short and long-term demands of existing companies. Businesses may acquire the funds for equipment acquisition, repairs and maintenance, inventory, working capital, or real estate purchase. These loans are normally insured up to $750,000. The guaranteed rate is 80% on loans of $100,000 or less and 75% on loans more than $100,000.

Who Qualifies for an SBA Loan?

The 7(a) loan program is only one of the available SBA lending programs. There are multiple types of SBA loans – each with certain terms. The ideal SBA loan for you depends on how you will use it. Generally, you will need to meet certain basic requirements from the U.S. Small Business Administration, such as operating in a qualifying industry.

Some examples of qualifying industries include:

  • Childcare
  • Veterinary
  • Hospitality
  • Car repair
  • Healthcare
  • Retail

Advantages of SBA Lending

Competitive Rates

The APR is a percentage that incorporates all loan expenses in addition to the interest rate. APRs can be very different when comparing SBA lenders and non-SBA lenders. A lender that offers SBA financing may restrict its APR to 10% or lower, whereas lenders who don’t provide SBA loans may have loans with APRs as high as 99%.

Longer Terms

Another plus of SBA lending is that you may have a longer time to repay them, which means you’ll have more money available for other purposes. The loan period will depend on how you intend to utilize the money. The current maximums are:

  • 10 years for equipment loans
  • 10 years for Working capital or inventory loans
  • 25 years for real estate loans

Can We Help You Get Started?

At POM (Peace of Mind) Capital Funding Services, we offer a variety of funding options to start or grow your business. Call us at 631-354-9290 or write to us at [email protected] to schedule a free consultation with our team.

POM Capital & Funding Services is a leading provider of alternative funding solutions for businesses of all types and sizes, offering commercial finance solutions and products to businesses in the Centerport, New York area and throughout the state of New York.