Are you a small business owner looking to grow your business in Detroit? Unfortunately, business growth and expansion don’t happen without sufficient working capital. If you’re in a cash crunch, you can choose from numerous funding options available in the market. However, one of the best sources of small business funding is through the Small Business Administration – SBA loans Detroit.
The Small Business Association (SBA), which the federal government established, was specifically designed to help small business owners obtain capital. They knew how much impact small businesses did to the economy and with that, they created a resource that small business could take advantage of. The SBA then created the SBA loan programs.
Facts about SBA Loans Detroit
SBA loans are one of the most popular loan programs for small businesses. This is so because the Small Business Administration created these programs specifically to help small business owners secure funding. Small businesses are often denied loans due to inherent risks and smaller loan sizes. The SBA provides incentives to participating banks and private financial institutions by eliminating some of the risks associated with the lending of funds.
But before applying for an SBA loan, here are six things you need to be aware of:
1. The SBA Does Not Provide the Loan
This can be confusing for some, but the SBA doesn’t lend you the money. They’re only a resource center for small business loans. Instead, they work with both banks and other alternative lending institutions. Small business owners then go through these lending companies to apply. Once approved, the SBA guarantees up to 85% of your loan to decrease the risk of SBA-approved banks and financial institutions.
2. There is No Guarantee of Approval
The Small Business Administration does what they can to make it easier for small business owners to receive funding, but they do not guarantee approval. Potential lenders will still need to evaluate your business and check your financial statements as well as credit information. Banks, for instance, aren’t a fan of taking on risks. When they evaluate a business’ loan application, they will have to go through due diligence before considering approval. Lenders and the federal government want to see that your business can afford the taking on of debt. If you are not, they will most likely deny your request for funding.
3. The SBA Loan Application can Take Time
If you need fast cash, then you might want to try other funding sources. SBA loan applications generally take time, because both lenders and the SBA evaluate your application. Potential lenders may also ask you to provide financial statements, a business plan, as well as an explanation on how you’re going to use the funds, along with other necessary documents.
Before you submit the requirements, make sure that your business plan is organized and clear. The lenders should immediately see whatever it is they want to know about your business. They will want to know what marketing strategies you’ve put in place and how much you’re going to need to enforce them. Be sure to state each goal in your business plan as well as your mission and vision.
4. Perfect Credit is Not Required to Get Approval
Poor credit history can affect your eligibility, but it doesn’t mean you’re disqualified from getting an SBA loan. The SBA Microloan program is designed for new businesses, which means companies that have little to no business credit history can qualify.
Additionally, your business should also meet the SBA’s definition of small business. This means, that your company should have a specific number of employees employed to be considered. Other than that, the business should also meet the required gross revenue. You can learn more about SBA qualifications in their website.
5. You can Refinance More Expensive Debt with an SBA Loan
Many business owners use SBA loans to refinance debt because these loans offer low-interest rates and longer repayment terms. By using an SBA loan to refinance debt, you can lower your monthly payments and eventually increase your cash flow.
6. The SBA Decides on Interest Rates for Participating Banks
To keep the cost of loans to a minimum, the SBA sets a limit on the interest rates participating banks can charge applicants. As of February 2019, the maximum interest rates on an SBA 7(a) loan ranges from 7.75% to 10.25%, depending on the size of the loan.
Are You Ready to Apply for SBA Loans Detroit?
Whether you want to purchase a business real estate property, buy equipment, or expand your business, you can trust SBA loans Detroit to give you what you need. With one, you’ll be able to streamline your application process and get the money as soon as you get approved. Although there is no guarantee for approval and application can take time, it’s one financial resource you shouldn’t overlook. If you’re a start-up business, you can apply for SBA microloans. With the extra financial boost, you can easily make healthy financial decisions for your business and ensure that business will be booming in the years to come.