Small Business Administration (SBA) loans are secured by the government, which makes them a low-risk way of financing your growing enterprise. Lenders typically offer them with low yield rates and flexible terms, allowing businesses to grow without the risk of being debt-ridden. Here are the things you need to know if you’re planning on taking out an SBA loan in Ogden:
A Smart Way to Finance
The SBA program is perhaps the most popular type of government-guaranteed financing because it’s a fast and accessible way of borrowing money to fund businesses. Banks and other accredited lenders offer this type of financing following the government’s requirements.
The agency can secure 85% of a $150,000 loan amount, while anything more than that can be guaranteed for up to 75%. In 2016, reports show that the average loan was around $375,000. The program offers a maximum of $5 million loan amount.
If you’re planning to refinance an existing loan, create a new branch, or hire employees, SBA financing is a smart option. Its terms and rates are more feasible for small-business owners than other modes of financing.
Backed by the Federal Agency
Lenders provide money that makes up the SBA program, but the government secures a portion of it should the borrower default. The maximum guarantee could reach up to $3.75 million. This allows lenders to afford longer repayment terms, which means that the borrower’s monthly payments will be lower.
The only catch is that the application process can be time-consuming. Businesses that have been in good shape for at least two years are ideal candidates for this program.
If you’re in need of funds to grow your company, SBA loans could be a right fit. Be sure to work with a bank that has years of experience to guide you through the process and let you know your chances of being approved.