For those small business men and women out there, it is a known fact that there will be times throughout the life of your company in which you will need to look to outside lending sources for financial aid, in order to continue running your company, or to allow it to grow and become more profitable. There are different kinds of loans that are available for you to get, depending upon what circumstances you are in. The type I will be talking about today is that of the SBA loan.
A SBA loan is a good fit for those who are wishing to expand or grow their business, and need outside financing in order to do it. You may experience a sudden rise in the demand for the services or products in which your company provides. In order to keep up, you may find that you need to go out and purchase new equipment and machinery, or you may need to hire on more employees. This kind of loan is available to people in situations like this, because one of the main goals of the SBA, or Small Business Administration, is to provide assistance to small business people so that their companies may be able to experience growth, and ultimately become more profitable, at a rate in which they would not be able to without the additional help.
If you are in the beginning processes of starting up your business, you are in need of seed money to get it up and off the ground. Whereas a SBA loan is an option for those looking to expand their business, you are better off to look to venture capitalists and angel investors, and other less traditional money lending sources, since you most likely do not have the prior business credit history that is typically required from banks and similar financial institutions. One possible exception to this rule is the small business administration’s loan guarantee program. Under this program banks are guaranteed repayment in the event that you are unable to make your payments. As such approval for new companies occurs at a much greater rate than would be the case for direct funding through the same lenders. Make sure to ask your local small business administration office for details on this program to see if your company qualifies or not. As always I recommend that you discuss any major financial decision such as borrowing money for your company with a financial expert.