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As a small business owner, did you know there are several options available to you when it comes to small business loans? The Small Business Administration (SBA) is a federal agency that can help small business owners secure financing, especially when those business owners might have trouble meeting the requirements for a more traditional small business loan.
The first thing you need to know about SBA loans? They aren’t even actually “loans.” Instead, the SBA sets the guidelines for the loan with its partners (banks, other financial institutions, microlenders, and community organizations) and then partially guarantees that loan. The guarantee eliminates some of the risk for the partners, making them more likely to make what they would term as a “risky” lending bet on a business.
Because of this, if a business owner has access to a traditional bank loan, they are not eligible for an SBA Loan.
There are two common types of SBA loans:
1. The 7(a) Loan Program – This is the most used loan in the SBA’s loan programs. Business owners can use it to start or expand their businesses.
2. Certified Development Company (CDC) 504 Loan – Already established, growing businesses can apply for this loan to cover major fixed assets like land and buildings.
If you think an SBA loan might be the right option for your business, learn more about SBA loan requirements at SBA.gov. Then contact your financial institution or lender to learn more about their processes.
Has your business ever received an SBA loan? How it did work for you? Would you recommend it to other businesses? Let us know in the comments!