If you’ve got a small business, you know that there’s going to come a time when you want to expand, need new equipment, need a higher staff or any number of things that require you to have capital. In fact, you may decide that expansion is the only way to keep your business running in tip-top efficiency. To that end, you know that although you want to pay for most of this out of your own pocket or out of profits in the business, sometimes that is not an option. In a case like this, you’ll often be looking for things like business lines of credit, business cash advances or other loan instruments.
One option that you might not have considered is what is known as the SBA loan. One thing to consider here is that this type of loan is in fact not a loan at all. The SBA, or small business administration, is an organization that was founded in 1953 with the express mandate of helping small businesses get funds that they need for expansion and for proper start up. In a sense, they function as a guarantor of loans from both the government and other lenders. They mostly function as a liaison between the small-business owner and his or her lenders. Something else that they do is educate you on the kinds of loans and programs that are available and on how to make sure that you do the best application possible and get the loan you need.
The SBA also takes the time to educate you on various financial tools and how they can directly apply to the growth and management of your business. You could almost say that this is more of an educational program that a loan grant program. Something to consider is that there are different types of loans depending on what kind of business you have. One type of loan is available for a large business in the retail sector with many employees. There’s also loan program available for construction companies, and of course one for those businesses with fewer than 50 employees.
Why Get An SBA Loan
One of the things an SBA loan does is show you exactly what type of program will be best suited for your business. Not only does this educate you and show you options that you may not have known existed, it can also ensure that you don’t make the mistake of applying for the wrong type of program for your business, only to be turned down or to get in over your head with respect to payments and interest rates.
Of course, something you’ll want to do first is plan out exactly what you think you need, when you need it, and how much you’re willing to spend. This will give you a good indication of what types of business loans to apply for and whether or not you might want to consider a different type financial tool, such as a business cash advance.
Who Should Get An SBA Loan
Just because you can get an SBA loan doesn’t mean that you necessarily need to. In some cases, the more traditional lending methods such as a bank loan for small business, a business line of credit or even a business loan that you get online might be more suited to your immediate goals. Keep in mind that, as a business owner, you have to ensure that you look at all of the options available to you (of which there quite a lot). In addition to SBA loans and business loans, there are also specific programs developed for businesses comprised of only one person.
One thing to consider, especially regarding the small business administration and the SBA loan, is that you can’t rush into anything. You need to take the time to thoroughly understand each of the loan programs and make sure that your business fits into at least one. If your business does not or you cannot see advantage of getting help from the SBA, then you may want to consider alternate source of funding. However, you will want to use the SBA if you’re looking at getting a bad credit business loan. The reason for this is that the SBA guarantees your loan to the lender and the government, meaning that you a better chance to get the loan you need even if your credit is less than stellar. This something that the SBA can help with and certainly something that you should consider before you try to do everything yourself.
Indeed, while the SBA can help you with a lot of the paperwork, you will still need to have a proper business plan as well as have all of your necessary documents organized and available so that you can give the best impression to the lender. The Small Business Association will act as a go-between for you and the lender. However, nothing takes the place of being properly prepared. You need to make sure that you go over your projected earnings – as well as your projected costs – and can show steady growth over a period of time, especially when the amount of money you want is large. In short, getting an SBA loan is not something you should consider if it is your second day in business. After one or two months, once you’ve got some paying clients or are growing extremely fast, then it is certainly something to look at. They will not only help you get through all of the paperwork but will also take a great degree of stress off of your shoulders – something many small-business owners do not consider.
Which SBA Program is Right for Your Business
In fact, when it comes to things like business loans, lines of credit and cash advances, a small-business owner may find him or herself overwhelmed with the number of options available to them. Of course, the key is to consider exactly where your business is going and what you actually need. Often times, those needs are, in reality, wants. Consider for a moment the feeling you get when you first start your business: you’ve registered your website, registered your business name, and are ready to go. At this point, many business owners make the mistake of thinking they need the biggest, best, newest, and shiniest equipment, chair, computer and so on. Often times, they fail to realize that their work can be done quite well with the things that they already have.
Preparing for An SBA Loan
The owner who considers getting an SBA loan should also consider having both current projects and future projects, to make sure that you can actually pay back what you owe. It can be very difficult to truly know exactly when you need that new piece of equipment and when you just want it. If you find, for instance, that you are taking on so much work that your computer is running slowly or you just can’t seem to get as much done as you need to reach your current goal, then it is definitely time to consider upgrading to ensure that you can not only handle the amount of work that you’re getting but that it can be done right. If you find that your current equipment is actually becoming a bottleneck to not only your deadlines but the quality of your work, then upgrading is the right choice. Similarly, if you find yourself run off your feet every day, then it’s probably time to consider getting a team together and perhaps renting office space.
All of these things take money, and unless you’re very wealthy, you probably won’t be able to pay for them out of profits from the business. This is where an SBA loan and their financial help will come in handy. Getting an SBA loan, business loan or line of credit is certainly something that the new business owner will want to consider, especially if he’s finding that his business is growing at an exponential rate. And although many of us business owners like to be self taught, looking at things like an SBA loan is wise. We can’t know everything and you will need help from time to time. The organization makes not only getting the loan easier but also makes becoming informed easier as well; this is something that cannot be taken for granted. It’s nice to know, that whether you get a business loan online or an SBA loan, there is an organization that is there to help you no matter what the type of business you have and what kind of loan you need.