SBA Loans vs Conventional Loans for Business Funding

If you’re looking for an alternative funding option to traditional business loans, consider applying for SBA loans. An SBA loan is backed by the Small Business Administration and comes with some unique traits. Here are some common differences between these two typical funding options.

Application Process

Compared to a conventional loan, an SBA loan is comes with some hefty paperwork. The government backing requires double the amount of paperwork of a traditional lending option. Not only will you need to apply for a loan from the bank or financial institution you’re receiving the loan from, you’ll also need to send in paper to the SBA.

Some SBA loan options can take up to 120 days to finally be approved for. These forms of financing are suitable for long-term business investments, but aren’t responsive enough for short-term financial needs.

Improved Terms and Rates

If your application is approved, you can enjoy long terms and low interest rates. Take out an SBA 504 or 7(a) loan for up to 25 years. Typical business loans may be considered a long-term loan, but come with a significantly shorter term length. The interest rates of SBA loans are set to ensure that you won’t overpay for a loan backed by the government.

Flexible Options

There are a range of SBA loan options available to small-business owners, so you can take advantage of a form of financing that’s flexible enough to handle your business needs. Whether you need the general 7(a) loan or a more specialized 504 loan, you can utilize generous SBA options for whatever investment opportunity that you wish to pursue.

While you may not have a rapid response time, you can still enjoy flexible financing. A 7(a) loan can be used for any operating expenses, purchasing real estate or any unexpected costs that arise with traditional small business ownership.

Convenient Qualifications

Don’t let a low credit score or small down payment prevent you from receiving financing. An SBA loan is partially backed by the government, so the collateral backing requirements are less strict than traditional loan options. Even if you don’t have a major down payment available, there are options to receive financing to purchase real estate, equipment or cover operating costs.

Compare SBA loans for yourself to enjoy excellent interest rates and reasonable terms. While you may have to deal with more paperwork than traditional loans, you’ll enjoy a range of benefits that help your business grow.


Related Posts