If you have concerns about applying for a conventional business loan, consider SBA Loans, instead. This alternative source of fundings has varying terms and rates- and approval is easier to obtain than through traditional lenders and banks. SBA- Small Business Administration- loans can help where conventional loans can’t.
Here is what borrowers need to know:
Documentation
Many prospective borrowers may not meet the stringent qualifications required by a bank or other lender, so the SBA can help. For this reason, however, there is a lot more paperwork and documentation needed for the application and to guarantee the loan.
Complexity
Nothing related to the government is simple- and SBA loans are no exception. There are a lot of rules and regulations attached, so borrow accordingly.
Turnaround
SBA loans are not speedy, and the approval process can take up to four months, in some cases.
Interest
The maximum interest rate on an SBA loan is better than what you will pay with other alternative lenders, at around 8% as of 2021. Remember that interest rates are contingent on your credit rating.
Repayment
The terms for SBA loans are typically much longer than other lenders offer. This means lower payments over an extended period of time.
Flexibility
There is more flexibility for borrowers with SBA loans. Some borrowers may be able to only pay interest during times of financial hardship or request a deferral of payments. Ask your lender to learn more.
Qualifications
One of the most alluring aspects of a SBA loan is that the qualifications are not as rigid and stringent as traditional loans. This makes it a viable funding source for new businesses and brands without as much capital.
It may not be easy and fast to get an SBA loan, but borrowers may find that they have longer repayment terms, lower interest rates, and a bit more flexibility than with a conventional lender, like a bank or credit union. Want to find out more about alternative lenders and financing? Talk to the money experts at Rustwood Capital today!
