For startups and small businesses, funding is critical to achieve success. In fact, about 82% of small businesses fail because of inconsistent or lack of cash flow. To ease the burden that many small businesses face, the Small Business Administration (SBA) offers various types of loans. These loans are guaranteed by the SBA, allowing lenders to offer low interest rates as well as flexible lending terms. With this type of loan, you can grow your business without the worry of financial hardship.
As a small business owner, you’ll want to know the ins and outs of these loans. An SBA loan may be just what your company needs to get it on the path to success.
Applying for an SBA Loan
To apply for a business loan offered by the SBA, you’ll definitely need to have your ducks in order. You will need to provide all sorts of business documents, including financial records and tax returns. Before applying, be sure you have:
- Borrow information form
- Personal financial statement/personal history statement
- Personal income and business tax returns from the last 3 years
- Business license and lease
- Loan application history
Once you’ve gathered all of this information, you’ll want to head a local SBA district office to learn about approved lenders in your area. You can also use the agency’s SBA LINC tool, which matches you to potential lenders.
Types of SBA Loans
The SBA offers several different types of loans. The agency’s most common loan is the 7(a) loan program. This loan allows business owners to borrow up to $5 million. It can be used for expansion, working capital, and for equipment purchases. Various lenders offer this type of SBA loan, including banks, credit unions, and specialized lenders.
For startups, a microloan is an ideal choice. These loans offer up to $50,000 and are provided through community-based nonprofit organizations. These loans can be used for starting a business, inventory, capital, and business equipment.
If you’re looking to buy land, facilities, or machinery, consider the 504 loan program. This loan has a top guarantee of $5 million. It is offered by nonprofit organizations as well as private-sector lenders.
Before you choose a SBA loan for your company, take time to read reviews about each loan that you’re considering. In the end, you can sign confidently knowing you’ve made a wise financing decision.
Importance of Loan Reviews
With the above information, you may have a good idea of which type of loan is most suitable for your company’s needs. However, if you’re looking for more in-depth data to have a holistic understanding of a specific loan, you’ll want to take time to read SBA loan reviews. Loan reviews offer all sorts of pertinent information that you’ll want to know about the type of loan you’re considering.
With reviews, you can learn about the loan as well as the lender. These reviews are timesavers as you don’t need to go from webpage to webpage reading about each type of SBA loan or the lender.
Reviews to Read
One review worth reading is Nerd Wallet’s review of SmartBiz. Though many SBA loans are received through a traditional bank, SmartBiz is an online lender that makes the process much easier and more convenient. The review provides useful information such as loan amounts, APRs, loan term, and other information. The review also gives some insight about Smartbiz as a lender, providing ratings for cost, time to funding, as well as ease of application.
Another top lender to learn about is Kabbage. A review written by Magnify Money provides in-depth knowledge about Kabbage’s small business loans. The review walks you through the process of preparing to apply to accepting your loan terms. There is all sorts of detailed information about:
- Loan eligibility
- Required documents
- Pros and cons
- Loan details
- Understanding the fine print
The review also talks about other lender options, pointing out the importance of shopping around to find the best option.
To round out, check out Value Penguin’s website to read its review of OnDeck, another trusted SBA lender. Upfront the review offers pros and cons of using OnDeck as an SBA lender. The company mentions how this lender and loan are best for businesses that need quick funds as well as owners with decent credit scores. The review points out that OnDeck may not be a suitable lender for new businesses or companies will low annual revenue.
The review also provides information about loan amounts, APRs, loan terms, and the benefits of becoming a repeat customer.
By reading SBA loan reviews, not only can you learn more about the loans available to you, you can also best determine which lender is best for your company. Reviews allow you to get a thorough understanding of your options so that you are able to pinpoint the loan type and lender that will give your small business the funding boost it needs.