Every year, thousands of business owners in the U.S. utilize business loans from the small business administration (SBA) to invest in their small businesses. There are different types of small business loans available to entrepreneurs, out of which sba loans are the most preferred because of their repayment terms. This also makes it hard for businesses to qualify for compared to other loans offered by financial institutions. However, companies should explore this financial product before submitting an application or making a well-informed financial decision.
In this article, we will discuss what SBA loans are, the benefits of using SBA loans, choosing an SBA business plan writer, and how to avail SBA financing for your small business.
What are SBA Loans?
As the name implies, SBA loans are loan programs issued by the U.S. Small Business Administration (SBA) or a member of its network of supported participating lenders, typically traditional banks. These loans have stringent qualifying standards, but once your application gets approved for an SBA loan, you can easily leverage their flexible repayment terms and low-interest rates to grow your small business. These factors make SBA loans one of small businesses’ best and most sought-after financial products.
It is important to remember that the SBA is not the one doing the lending. As mentioned above, the SBA works with a network of supported financial lenders that lend money to small businesses and with flexible terms because the SBA partially issues the loans that the financial institutions guarantee to small businesses.
This also means that they will secure a part of the loan that a small business receives. In turn, if you cannot pay back your loan, the lender (bank) will know that the SBA will cover the amount they promised. Note that the SBA can cover up to 85% of a loan’s amount. Without this partial promise, the lender will often consider issuing a loan to a small business “extremely risky.” More so, small businesses that do not secure loans issued by the SBA get a much lesser amount with less-than-ideal terms — that is, if at all they’re able to qualify for a bank loan.
What are SBA Loans Used For?
SBA loans are designed to help cover the expenses mentioned below and provide business owners and entrepreneurs with the capital they require to pay timely bills, grow their businesses, and remain solvent.
Additionally, these loans also serve as a medium of emergency capital for small businesses in need during dire conditions such as global recessions. SBA loans also offer potential borrowers an option to apply for a personal loan to help grow or expand their business operations. This means that some of the common purposes that borrowers apply for SBA loans include, but are not limited to:
- Buying commercial properties
- Using it as a working capital
- Refinancing debts
- Investing in a business
- Buying equipment
- Restocking inventory
- Making payroll
Benefits of SBA Loans
Targets Entrepreneurs and Small Businesses
SBA loans and SBA Express loans are specially designed for entrepreneurs and small and medium-sized businesses (SMBs). The SBA partners with a member of its network of approved participating lenders and creates guidelines with the goal of helping small businesses in their expansion and growth.
Different Uses for these Funds
These loans can be leveraged for a variety of reasons. According to the SBA, businesses can use SBA loans to provide capital for their company expenses, including establishing a new franchise, business expansion, purchasing equipment, making payroll, working capital, or real-estate purchases.
Since these loans are partially guaranteed by the federal government, more lenders are willing to offer financing to SMBs through SBA loans. The eligibility criteria are also minimal for SMBs that apply for these loans.
SBA loans and SBA Expense loans are secured, which means that SBA agencies offer to cover a percentage of the loan amount to the lender, thereby eliminating the risk factor. However, if you can pay the loan amount you owe, the lender can seize your assets.
Choosing an SBA Business Plan Writer
Whether you’re establishing a new franchise and require funding for your business or a serial entrepreneur seeking capital for business expansion, one thing is certain; any prospective investor will require a business plan from you.
When choosing a business plan writer or an agency, many of them will promise that they will simply write a business plan for you within a short time. A reputable business plan agency will provide a business plan by working together with you and will ask you a lot of questions regarding your business goals.
Since you are the expert in your business, you should thoroughly consult with your business plan writer throughout the entire writing process. This process will guarantee that they develop a business plan that will be effective and increase your chances of success. Read this article to get more insights on the traditional business plan format in case you want a comprehensive plan to request financing from a lender.
Why Should You Work With BSBCON Business Plan Writers
Small and medium-sized businesses and enterprise owners dominate the U.S. economy. As they begin to adapt to the ever-changing market conditions, the demand among them for SMB consulting services of multiple kinds is expected to increase considerably.
Think of BSBCON as a crucial and cost-effective extension of your own business. BSBCON is a leading company that offers SMB consulting solutions, including providing thorough business plans, pitch decks, strategic planning, and more, that save you both time and resources.
If you want to increase your chances of securing capital, grants, or investors, partner with BSBCON and get a solid business blueprint with a professional business plan. Get in touch with BSBCON’s SMB consultants today to see how they can help you. If you want to learn more about how to apply and qualify for SBA loans, here’s a comprehensive guide on SBA loans to help you get started.