EVERYTHING YOU NEED TO KNOW FROM THE SBA
Government loans are a good solution to strengthen your business, as they can provide you with low-interest financial assistance. They are offered by the SBA, an agency of the United States government committed to supporting small businesses in the country.
What are SBA loans?
SBA loans are financial products offered by the United States government. The Small Business Administration (SBA) is a government agency that supports small businesses. Low interest rates, long term loans, or microcredit are one of our specialties.
What amounts can I get?
Depending on the type of government loan you choose, you can get up to $5 million:
- Interest rates, terms and terms
- On average, government loans have rates of 6.5%, 7%, 10.5%, or even as low as 3%.
- There are varied payment terms, from 6, 10, 20 and up to 25 years.
- Waiting time: from when you apply until you receive the funds
- Waiting times can vary between 2 weeks and 3 months.
Please note that government loans are provided through banks or Certified Development Companies (CDC). So, the wait depends on the speed with which you collect your documents and the intermediary’s own times.
How do government small business loans work?
The Federal Small Business Administration (SBA) offers government loans to small business owners through banks and credit unions in the United States. For entrepreneurs, these loans represent a huge benefit, since they can get the money, they need without paying much in interest.
Advantages and disadvantages of SBA loans
- For loans up to $ 150,000, SBA 7A Loans guarantees up to 85%. For loans over $ 150,000, SBA guarantees up to 75%.
- Because they are supported by the federal government, brokers can allow high-risk loans.
- Many company profiles are eligible for credit.
- Tariffs are preferred. This means that they are low-cost loans.
- They have many purposes: to open a company or buy assets, as working capital or to invest in the growth of your business.
- It is provided only to companies that need capital.
- If you do not fulfill any debt obligation to the federal government, you will not be able to get it.
- It can be difficult to fill out the paperwork because you have to meet the requirements of the SBA and the intermediary organization.
- Some information is in English only.
How do you get a government loan?
SBA Microloan has strict requirements for participation in these programs. That is, it is not easy to get these loans from the US government for business. This is explained by the fact that the agency guarantees that banks will repay the debt in the event of default, as the money to cover these liabilities comes from taxpayers.
Here are the main requirements people must meet to get a government loan:
- To get one of these government loans, your business must be based and operating in the United States.
- To qualify for a Small Business Administration loan, you must have a minimum credit score of 680 or higher. Personal and business records are also considered.
- Most of these loans require a guarantee. If your business assets cannot back up your loan, you can use real estate and personal assets as collateral.
- Your business must be in business for at least two years and be profitable.
What do I need to prepare to apply for a loan?
Generally speaking, SBA loan applications take a long time due to the paperwork involved. Here are the documents you will need to collect to apply for a government small business loan: Previous address, name, criminal record, educational background and financial status.
- Business background. You must submit a resume to the Small Business Administration and demonstrate experience in the industry.
- Business plan. The company should prepare a well-thought-out business plan and outline the business’s financial projections and medium-term goals.
- Personal and business tax returns. You must file personal and business tax returns for the last three years.
- Financial Statements. Financial status is one of the most important requirements for an application. For lenders, it is important to know the status of your bank account, as well as your profits and losses.
- Guarantee. Also called warranty or collateral. Although not always required, points will be credited to your application if you demonstrate that you have valuable business or personal property to use as collateral for your credit.
- Other documents. To prove that your business is operating legally, you must provide the following documents: