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The Small Business Administration, SBA, provides one of the best ways to come up with funding for your new venture without the hassle of having to try to secure investors. These loans are typically offered with lower interest rates than traditional business loans, and they come with more flexible terms, too, because they’re a federally guaranteed loan. Because of this, the loans tend to be ideal for first-time small business owners, especially those who lack the negotiation and persuasion skills needed to attract other forms of outside funding.

What is an SBA Loan?

SBA loans are special loans designed to assist the new small business owner with startup funding. These loans are generally offered by banks, although you can sometimes find them offered by independent lenders.

Because the SBA loans are guaranteed, between 75 and 85 percent, depending on the specific type of loan, lenders are more willing to offer longer repayment programs, which lowers the typical monthly payments.

How to Get a Loan

The best way to approach the loan process is to begin by searching the SBA website. There, you can find a list of local, approved lenders as well as a checklist of required documents. All the standard documents are required, such as previous tax returns, financial statements, and others.

Once the required documents are collected, the type of loan needs to be decided on. The reason for the loan will determine the type of loan.

Next, the bank or other approved lender, whether an online lender or a microlender, will need to be selected. Lenders have different product offerings, which can include lines of credit, term loans, and accounts receivable financing.

Finally, the lender selection process should include looking at APR rates, the size of loans offered by the lender, how often they make SBA loans, and any other vital criteria relevant to the business.

How Long Does it Take to Get a Loan?

It can take anywhere from a couple of weeks to a couple of months to get an approval for a loan. It really all comes down to a few factors such as how much money you earn, your credit score, how long you’ve been in business, and your current cash flow situation.

Overall, an SBA loan is something that should be looked into to help out where investors are non-existent or where extra funding is needed for staff expansion or extra equipment is needed for business growth.