If you are starting a new company, there are many ways in which you can fund your new venture. You could seek out starting capital from friends and family, or you could look for business partners with the necessary funds, or seek out venture capital. All these are viable options and you should look into all of them before making your final decision. Today however, for the scope of our discussion we will be asking the question why get an SBA loan. We will outline some of the reasons to do this in today’s discussion.
When asking the question why get an SBA loan we should first consider who these loans are geared towards. These loans are designed for small businesses, defined in general as companies with less than $100,000 in revenue each year. For other purposes they may be defined as companies with fewer than 500 employees. The specific criteria will depend on the loan you are attempting to get and you should discuss this with your local SBA agent.
The primary purpose for attempting to get a loan of this type is to find your new small business in the easiest way possible. There are a few ways in which they make obtaining funding easier for you. One way is by assisting you in setting up a formal business plan. You may not realize this but a formal plan differs in many ways from what you may have already done in considering starting your new business.
This formal plan will include in detail all potential costs as well as estimated revenue and profits. This can be very helpful in showing you where perhaps some of your personal estimates were not realistic or accurate. Another way in which this program helps you in obtaining funding is by setting up previously established criteria which both you and the lender should be aware of. In this way it is easier to find a good match between lender and borrower which should speed up the process.
So in conclusion the answer to why get an SBA loan is as follows. This program assists you in setting up your business plan, by offering consulting services to this end. Once you have a plan set up, they will help you to get funding for a loan. The loans which they approve meet certain established guidelines which can be explained to you before signing any kind of loan agreement. This keeps the whole process transparent.