I wanted to summarize a recent article directed at small businesses looking to get a bank loan secured by the SBA.
Here’s a summary:
Pros:
- “…the interest rate is right around 6 percent and it’s locked in at a fixed rate, in some cases for 20 years.”
- “Some small business owners have found the SBA a worthwhile partner when it comes time to leverage a major business loan. “
Cons:
- “Borrowers, however, should be prepared to jump through some hoops securing any type of loan in this economic climate. Banks will want a number of assurances that the small business is a sound investment for them, and they will indeed see a return on their loan.”
- “A prospective borrower shouldn’t walk into a financial institution hoping to obtain a loan coupled with an SBA loan without good credit, a viable business plan, a working knowledge of the industry or business that he or she intends to start or buy and a 10-to-15-percent down payment.”
- “Navigating the SBA Web site to gain more knowledge of the process can be a daunting prospect, not to mention the myriad of paperwork involved in the application process.”
According to the article, the process can be so overwhelming, that some small business owners have to invest time and money going to independent brokers!
If you don’t have what it takes to get the SBA to secure part of your loan, you may be unable to get a loan at all, in the current credit crunch. If this is the case, or if you just are looking for a faster simpler solution, you can look into business cash advance, a type of credit card factoring to get up to $250,000 approved in less than 24 hours, bad credit is okay.
However, if you do have the time and good credit, though, SBA backed loans are the way to go.