The Top Reasons To Apply for SBA Loans Over Traditional Business Loans
Almost every small business owner will need to take out a loan to grow their company and achieve their goals. Though you can always work with major lenders and take out traditional term loans, they’re not your only option. SBA loans offer businesses unique benefits that other, more traditional financing options, lack. Here are a few of the top advantages of this type of loan.
They’re Easier To Qualify For
When you’re just starting to grow your company, you won’t have years of proven profit histories to show lenders that you’re a worthwhile borrower. This means you’ll have a hard time qualifying for a loan in the first place let alone qualifying for the amount of money you need. When you apply for a loan backed by the SBA, you’ll find it much easier to qualify for financing. The SBA guarantees a portion of the loan so lenders are more willing to issue loans to newer and riskier businesses.
Most Have Low Interest Rates
Lenders take your company’s finances and your credit score into consideration when you’re applying for traditional business loans. If your score is low or your finances aren’t great, the interest rate you’ll qualify for will be relatively high. The higher the interest rate is, the more money you’ll owe the lender and the higher your monthly payments will be. When you apply for an SBA loan, you’ll be able to lock in a lower interest rate. Though lenders can still set your rate based on your finances, they have to keep it within a certain range. That range is much lower than traditional business loans, saving you money in the long run.
You’ll Get Flexible Repayment Options
When you take out a traditional business loan, the lender will expect you to make regular payments in full and on time. If your sales drop and your profits take a hit, you’ll still have to make those regular payments if you want to stay current on the loan. SBA-backed loans offer more flexible repayment terms. If your business isn’t performing well, all you need to do is call your lender and discuss your options. They’ll be more willing to make changes to your repayment schedule to help you keep your business afloat.
SBA loans offer small business owners the chance to get the money they need quickly and affordably. If you’re looking for a loan to help you make improvements, buy property or even increase your inventory, an SBA loan is a great option.