An SBA 7(a) loan is the most popular one offered by the Small Business Administration, and this type of loan is frequently sought out by small businesses for the purpose of growing their business and keep it operating smoothly. One of the reasons these loans are so popular is that they have backed up to approximately 70% or 80% of the loan amount which is covered by the U.S. government, and that means traditional lenders are much more likely to approve your application. Here are some ways that these kinds of loans can be of value to your small business.
The Business Purpose of Your Loan
There are a great many ways that you can use the money from your SBA loan to improve your business operations. First of all, you can purchase equipment or land, you can finance your startup costs, you can use the money to grow your business, you can purchase inventory or other supplies, or you can use it to refinance some of your debt. All of these are extremely valuable uses for an SBA loan, and in some cases, they can even make the difference between your business staying solvent, and having to go bankrupt.
Details of the Loans
While there is no minimum amount required under this loan program, a small business that qualifies is eligible to borrow as much as $5 million, and obviously that can be a huge boost for any company. In most cases, you would have between five and 10 years to pay off that loan, although this is something that is generally worked out with the traditional lender involved. In addition, you would probably also receive a favorable interest rate, since the SBA insists on capping interest rates at under 10%. In actual practice, interest rates will generally fall somewhere between 6% and 8%, which is considerably better than you might normally get from a traditional lender.
Interested in Securing a 7(a) Loan?
We work with the SBA on a number of different loan types, and if your small business is seeking an SBA 7(a) loan, we may be able to help. Contact us at Fast Commercial Money, so we can discuss your eligibility for one of these government-backed loans.