Our Wild Wednesday is made to provide valuable information regarding different kinds of funding accessible to small businesses. Today we are providing information on Small Business Administration Loans.
Small Business Administration Loan
The U.S.Small Business Administration is a government bureau that provides small business the needed business support and financial assistance. A Small Business Administration loan is created by a financial organization – for instance a credit union or banking – and a part of that loan is ensured by the Small Business Administration. Many large financial institution in US have an SBA loan section.
Difference Between Business Loan & SBA Loan:
There are a few distinctions between SBA loans and business loans – like those provided by Merchant Advisors. They contain:
• SBA loans are usually offered to start up businesses where as Merchant Advisors require businesses to be in operation for a minimum of one year.
• The application of SBA loan requires comprehensive financial statements and business plan- the loan application checklist. Merchant Advisors have 3 step simple application and only requires last month financial records.
• A business can get as much as $500,000 from an SBA lender. Merchant Advisors business loans range from $5,000 – $250,000.
• Small Business Administration loan needs usually about 20% down from the business and real security for the loan amount. Collateral is a requirement for business lending. Whereas, Merchant Advisors business loans don’t require collateral and are backed by a personal guarantee.
• The repayment terms are a bit tight for an SBA loan. Merchant Advisors offers flexible repayment terms for business loans. In case of secured, repayment term range from 5 to 30 years where as 3 to 10 years in case in unsecured business loans.
Loan Application Process And Costs
For an SBA loan, the loan application process takes a substantial period of 2 months. Although it is determined by the amount issued. The cost of loan is based on the lender, applicant and the loan term and is susceptible to specified SBA maximums. For more information on loan amounts, fees and interest rate visit SBA guidelines here.
Repayment & Use Of Funds
Repayments are made month-to-month, quarterly and sometimes periodic. SBA loans are usually used for new business establishment, hire staff, make needed purchases like buying stock, gears, property, etc.
Business Credit With SBA Loans
Small Business Administration loans are beneficial in establishing business credit.