How Hard Is It to Get an SBA Loan? All Your FAQs Answered
May 6, 2024
As a cornerstone of our commitment to community investment, New Valley Bank & Trust takes pride in supporting small businesses in Springfield, MA, and beyond. With startup costs averaging $30,000 to $50,000, securing funding is often a crucial step for entrepreneurs embarking on their journey. With the right partner by your side, prospective entrepreneurs like you in Springfield, MA and beyond can realize their business dreams. In this article, we’ll delve into the intricacies of SBA loans, offering insights to demystify the process and empower you to make informed decisions.
How Hard Is It to Get an SBA Loan: A Brief Overview
Small Business Administration (SBA) loans serve as a lifeline for aspiring entrepreneurs and existing small business owners seeking financial support. Here’s a breakdown of the key components:
1. Definition
SBA loans are government-guaranteed loans provided by participating lenders, including banks and credit unions. This guarantee mitigates the risk for lenders, making it easier for small businesses to secure funding.
2. Guidelines
The SBA sets guidelines for loans made by partner banks, ensuring consistency and fairness in the lending process. As you can imagine, these loans tend to have tighter application standards. However, eligible businesses can use the funds for numerous applications. There are different SBA loan programs for different needs, depending on loan purpose, amount, and the industry in which the borrower operates.
3. Fee Waivers
In response to economic challenges, the SBA has waived all fees on loans under $1 million through the end of September. This initiative aims to provide relief and support to small businesses navigating uncertain times.
How Hard Is It to Get an SBA Loan? The Benefits Make It an Easy Choice
SBA loans offer several advantages, making them an attractive option for small businesses. These advantages include:
- Lower equity requirements with as little as 10% equity.
- Accessibility to loans of small and large amounts (up to $5 million).
- Better credit flexibility than traditional bank loans
Differences between SBA Loans and Traditional Bank Loans
SBA loans differ from traditional bank loans in several ways.
- Eligibility Requirements – While both require a strong credit history and financial standing, SBA loans may be more accessible to businesses with limited collateral or shorter operating histories.
- Terms – SBA loans generally offer more flexible terms compared to traditional bank loans.
- Application Process and Timeline – SBA loans may take longer to get approved than conventional loans. But the benefits of SBA financing can outweigh the extra time and effort.
How Hard Is It to Get an SBA Loan? Factors Influencing Approval
Want to increase your chances of being approved for SBA loans? If you do, ensure you meet these criteria:
- You are operating a for-profit business
- You should have put personal equity into the business, in the form of money and time
- You’ll have to demonstrate a need for funds, including the intended use of the loan
- Your business should be credit-worthy, that is, capable of repaying the loan
- Your business should fit into the small business category as defined by the SBA
How Hard Is It to Get an SBA Loan? NVB Is Ready to Partner With You
Are you ready to take a leap and apply for an SBA loan to boost your business? If you are, New Valley Bank & Trust is ready to partner with you. Please reach out to Donna Wheeler, our knowledgeable SBA Lender, at DWheeler@BankNewValley.com to let us help you realize your business goals!
