There’s no doubt SBA loans are one of the best financing sources available in the market for small business owners. While there are numerous loan programs that enable business owners to secure financing, the benefits offered by SBA Washington trumps virtually all of them. If you can qualify for an SBA loan, you’ll find that it comes with a variety of advantages over other sources of financing. It offers longer repayment terms, longer interest rates, and flexibility of use, among other attractive benefits.
1. Longer Repayment Terms
It’s safe to say that a majority of business owners are hoping for long repayment terms when applying for a loan. An ideal business loan that’s just right for you comes with a payment schedule that does not put a strain on your business.
Bear in mind though, virtually all small business loans come with short repayment terms. Short-term loans, as the name suggests, can only be repaid in as little as three months (with daily or weekly regular payments). Traditional business loans offered by banks typically give you up to five years to repay the borrowed amount.
SBA loans give small business owners more cushion because they generally give you 25 years to repay a real estate loan, 10 years for equipment and machinery, and up to seven years for working capital. With longer repayment terms, you’ll have an easier time calculating how your payment plan can fit seamlessly into your business plan.
2. Lower Interest Rates
As a business owner, you’re conscious of how much a business loans can cost your business. Interest rates are a great concern when applying for financing since lower interest rates mean lower payments and greater business savings.
The good news is, interest rates on SBA loans are typically lower than other more traditional business loans. While the interest rates on your loan will vary and will be dependent on your business’ creditworthiness, SBA 7(a) loan rates can be as low as 6.75%. The rates associated with CDC/504 loans and microloans are different, but also inexpensive. Unlike other types of term loans, SBA rates don’t increase past 10%.
3. Flexibility of Use
Other types of loans come with terms and conditions that strictly dictate how you can use the funds. If you’re applying for a loan in order to fund a specific need (like real estate or equipment and machinery), then the flexibility of use may not be that important.
However, most business owners applying for SBA loans need the funds for a variety of business expenses. While lenders require you to submit a detailed plan on how you’re going to use the funds, business owners need the flexibility of use for unexpected business expenses.
For SBA 7(a) loans, you can use the money to fund various business expenses that include refinancing existing debt, expanding your business, buying necessary supplies, adding to working capital, purchasing inventory or equipment, and even buying real estate.
SBA Washington: Small Business Loans for You
SBA Washington has created small business loans for entrepreneurs who can’t secure funding elsewhere. At SMB Compass, our finance experts help business owners like you obtain the funding you need, when you need it.