Would you like to find out what SBA loans are?

Our team at BluWav Capital has put together this post to explain you further. They are financial products offered by the United States government, yes. But much more than that, too!

The SBA (Small Business Administration) is a government agency that helps small businesses. Long-term, low-interest loans or microcredits are one of its specialties.

What amounts can I get?

Depending on the type of government loan you choose, you can get up to $5 million with varied payment terms: from 6, 10, 20 and up to 25 years.

Waiting time for SBA loans

Waiting times can vary between 2 weeks and 3 months.

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.

When a credit is authorized, the federal agency guarantees these lenders that, in the event that the borrower defaults, they will cover the debt.

For entrepreneurs, these loans represent a huge benefit, since they can get the money they need without paying much in interest.

To access one of the loans from the Small Business Administration you must have a good credit score and demonstrate that your company generates enough cash flow to pay your debt, among other requirements.

Advantages and disadvantages of SBA loans

Here are the advantages and disadvantages of government loans granted by the SBA.

Pros:

  • For loans up to $150,000, the SBA guarantees up to 85%. For loans over $150,000, the SBA guarantees up to 75%.
  • Because they are backed by the federal government, brokers can authorize loans with higher levels of risk.
  • Many company profiles are eligible to receive credits.
  • Rates are preferential. This means that they are loans with lower costs.
  • They have many uses: to start a company or to purchase assets, as working capital or to invest in the growth of your business.

Cons:

  • It is only granted to companies that demonstrate the need for capital.
  • You cannot receive it if you are delinquent on any debt obligation to the federal government.
  • The paperwork can be complex, because you must meet the requirements of both the SBA and the intermediary entity.

If you have questions with SBA loans, the best option is to always trust a professional advisor. If you need our guidance, we’ll be delighted to help! Contact us and we’ll get you the finance for small businesses you are looking for!