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Small Business Administration loans are among the most common ways to fund a startup. Though you still need to prove you are a good risk, these loans are often easier to qualify for than standard bank loans.
The Small Business Administration, also known as the SBA, doesn’t lend you the money. Instead, it guarantees a percentage of the loan amount, which makes it more likely a bank, community development organization, or micro-lending institution will approve a loan for your business.
There are several benefits of an SBA loan, including:
Types of Loans Available
The SBA has several types of loans available. The most popular are:
Qualifications for Loans
Many owners of a small business in trouble think these loans will bail them out. That is not true. You still need to have good credit, personal assets, a business plan, and proof that you are a going concern. This is not a program for companies that are failing.
The qualifications you need to meet to get an SBA loan are as follows:
Applying for Loans
These loans require much documentation. These include statements for:
The lender will ask a number of questions about your business to see if he thinks you are a good risk. These might include:
The SBA is not a lender of last resort if you are teetering on bankruptcy, but it can lend a substantial financial hand if you need money for growth and to get over a slowdown. If you meet the standard requirements, this is an excellent way to get a low-interest loan with affordable monthly payments.
For additional information on Small Business Administration loans, visit the SBA Loan Program website.