Just about every ‘new business how-to’ guide suggests applying for an SBA loan.
And for good reason: the Small Business Administration can connect entrepreneurs to various sources of financing to get the new venture off the ground. Maybe you have plenty of start-up costs, such as equipment and facilities, inventory, or even a need for payroll until steady revenue starts coming in.
It’s also a good way to help your company’s budgeting efforts by always putting money aside for payments. SBA loans also can be made at other points in a business’ life, but start-up costs are definitely a great use.
Getting all the paperwork and information together for a loan application also can help you focus on the specifics of your business, since lenders will want all sorts of details such as your current finances, future projections and ability to pay off.
Doing your research can also help you decide which SBA loan type works best, such as certain terms, conditions and amounts. Or, in some cases, you may want to consider seeking other sources of financing, especially if your industry is considered somewhat risky.
Consider these strategies when applying for SBA loans.
It may not be instant
If you need some up-front money right away, you might want to look for other sources. Because SBA loans are more complex, it likely will take three to five weeks from granting approval to getting access to these funds.
Find the best term
How long it will take to pay back your loan? A significant loan could be useful but might take longer than you like to pay off, especially with interest rates thrown in. Terms typically range between five to 25 years, although 10 years seems more reasonable to many.
Check back in the future
If SBA officials initially deny you, this shouldn’t close the door forever. They may be more receptive in the future especially if you have a clearer pattern of payments and your company continues to grow.
For more information about funding options for business, visit Black Wolf Capital Group.