An SBA loan is a great financing option for business owners who are expanding, acquiring, or in need of working capital. Backed by the Small Business Administration, SBA loans offer a unique opportunity to business owners even if they qualify for traditional small business loans.
Below are some of the benefits we can provide through an SBA loan:
Lower Down Payments
Many SBA loans, including the popular SBA 7(a), have lower down payment requirements. This is a huge advantage for small businesses that are growing or just getting started since it allows them to keep working capital in the business.
SBA loans can offer the advantage of long-term fixed rates. This helps business owners better determine what their monthly payments will be without any large fluctuations. Fixed rates are another way that SBA loans help businesses manage their cash flow and monthly expenses.
There are some instances when a business owner could benefit from accelerating their payments. SBA loans allow for flexible pre-payment options in the event that a business owner wants to pay off the loan faster than originally planned.
Favorable Loan Terms
The SBA’s guarantee eliminates a lot of the risks banks assume with making loans. Because of this, most SBA lenders are able to relax some of the stringent requirements for financing often found in conventional business loans. One specific area where this applies is loan covenants. There are no operating loan covenants associated with SBA loans. This means that as long as your payments are current your loan won’t be called or put into default due to your financial statements.
Applied to Many Uses
SBA loans can be used to launch a new business or expand an existing one. No matter the industry, SBA loans make it easy to apply financing to many different business needs in one loan. These needs can include things like working capital, equipment and closing costs.
No Banking Requirements
Conventional lenders will sometimes dictate other banking requirements in order to apply for a business loan with them. With an SBA loan, you are free to decide where you want to house your business checking and personal accounts.
When applying for an SBA loan, it’s important to partner with a lender that will help you navigate the lending process. At FNB Small Business Finance, our SBA experts partner with you to achieve business goals together. When you’re ready to get started, contact one of our Business Development Officers!