If you decide to apply for a small business loan, the first place you will probably think to apply is with the lender with whom you already have an existing financial relationship. Perhaps it is a local lender that handles you small business checking account or a national lender that regulates your business credit card account. However, there are other non-traditional sources that may be willing to lend you money more readily than traditional lenders are.
Instead, try looking for a Small Business Administration-approved lender. The SBA partners with certain community-based lenders to loan money to certain categories of business owners. The mission of the SBA is to provide loans to minorities and people groups who are at a disadvantage for getting traditional business funding.
Who Qualifies for an SBA Loan?
The SBA partners with lenders and backs the loans that they give to qualifying business owners. Examples of qualifying business owners include women and minority ethnicities. Although anyone may apply and qualify for an SBA loan, the SBA lenders have a specific goal of approving loans for certain categories of business owners, despite low cash flow or low capital availability.
Although you still have to provide detailed plan of how you intend to use the money you are applying for, you may achieve more favorable terms with an SBA lender than you would through a traditional lending source. Typically, you may achieve a longer repayment term for your loan by financing through an SBA lender and you may also secure higher loan-to-value financing.