This blog post was contributed by our friends at SmartBiz
Are you a small business owner in need of funds to grow your business? If so, an SBA loan is often a good fit for qualified entrepreneurs. Here are six reasons you should explore an SBA loan to help your business flourish.
Funds fuel growth
Funds from an SBA loan can be used for a variety of purposes to fuel small business growth. According to a March 2016 SmartBiz customer survey, 77% of borrowers used loan proceeds for Working Capital. Another popular category was to use funds to reach more customers - 42% of survey respondents are using their SBA loan proceeds for marketing. Other popular uses for SBA loan funds are for equipment purchases, refinancing existing high interest debt and hiring new employees.
Growing your business is also great for the overall U.S. economy. According to the SBA, since 1995, small businesses have generated 64% of new jobs and paid 44% of the total United States private payroll. An SBA loan is a financial win-win.
An SBA loan can save your business big bucks
When small business owners use an SBA loan to refinance existing high-interest debt, they can save hundreds of dollars - or even thousands - each month. SmartBiz customer Milton Martinez owns Triple D towing in Texas. His SBA loan is significantly helping cash flow. “By getting rid of the two small loans I’m saving $15,000 - $18,000 dollars,” Martinez reports. “That’s money I can put back into growing my business or into savings.” There are debts that cannot be refinanced with an SBA loan. Check with lenders before you start the application process to see if your debt qualifies for a refinance.
SBA loans typically have the lowest interest rates compared to other funding sources like a merchant cash advance, peer-to-peer loans or credit cards. The Small Business Administration (SBA) sets the maximum interest rates that banks can charge on 7A loans. The maximum interest rates on SBA 7A loans are also based on market interest rates. As market interest rates change, so will the maximum interest rates on these loans. At SmartBiz, rates are currently 6.25%-7.25%.
SBA loan programs are generally intended to encourage longer-term small business financing. Loan maturities are based on the ability to repay, the purpose of the loan proceeds, and the useful life of the assets financed. Maximum loan maturities have been established: 25 years for real estate, 10 years for equipment (or demonstrated useful life), and terms for a working capital or inventory loan should be appropriate to the borrower’s ability to repay (up to 10 years). SmartBiz SBA loans have a 10-year term.
After completing an SBA loan application with a lender like SmartBiz, you can get funds in as fast as 7 days. The more organized and motivated a borrower is, the faster the funds will be available.
No prepayment penalty
Borrowers can pay off an SBA loan early with no prepayment penalty.
SmartBiz is the #1 online marketplace for SBA loans. SmartBiz uses advanced online technology to provide low-cost SBA loans in as fast as 7 days to small businesses. With low-rates and long terms, a SmartBiz SBA loan is the best bet for small business owners who want to grow and flourish.