When you’re looking to take out a loan from your small business, you have two major options. First, you can take out a small business loan from a private lender. You have to meet the lender’s standards and pay whatever interest rate that lender charges. Your alternative, if you meet the requirements, is to get a loan through the Small Business Administration, or SBA. These SBA loans have several advantages over traditional business loans.
First, they are guaranteed by the federal government. This means that the government assures the lender that it will receive repayment for the loan. Therefore, the SBA loan will come with a significantly lower interest rate than other loans. This means less cost to you over the repayment period. The federal government fixes the interest rate for an SBA loan, so as long as you meet the requirements, you get the great low rate.
Second, SBA loans have more flexibility with the length of the repayment term. A longer repayment term is ideal if you’re taking out a large loan and need to make your monthly payments as low as possible. You have a say with how long the repayment term is, and you can choose the term that best fits the needs of your business. You can even start with interest-only payments during the first part of the loan if needed.
Third, your SBA loan will not have any hidden fees or surprises. There is a small prepayment penalty if you pay off the loan ahead of schedule, but this only applies to some loans in some circumstances. The loan is fully amortized so there is not a balloon payment at the end of the loan.
Lastly, SBA loans have low costs to take out. You don’t need a very large down payment, and you can finance the low closing costs. These features mean that it’s easier for you to borrow the money you need.
To apply for funding for your small business, use the form on the right to begin the application process