Common Misconceptions of SBA Loans
When looking into financing options to help your business start or grow, you may have to make some difficult decisions. Traditional financing options like personal or business loans through a bank or lender may be out because you do not have the proper credit or business history. You can apply for small lines of credit, but these too come at a steep price. Plus, they are often not enough to cover all of what you need. Small business loans from the SBA can help fill in the gaps in your current financial situation. How do you qualify for them and what are the most common misconceptions surrounding them?
The SBA Lends You Money
When you apply to the SBA for any one of their small business loans, you probably expect the money to come from them. As you go through the application process and approval, this belief continues. However, the SBA does not give you any money. They create and originate programs that various lenders and banking institutions then choose to participate in. When the SBA gets an application, it vets it, approves it and passes it on to a bank to fund. The SBA backs a portion of the loan, as well as your lender. This is important for borrowers to understand, because their lenders are also taking on a share of the risk.
Small Business Loans Are Only for Small Businesses
The SBA is an interesting piece of the federal government’s aid departments. While it was founded decades ago to help small businesses find a firm footing in the country, it grew to include funding and loans for other people. They have several programs for people struck by natural disasters such as hurricanes and fires. The SBA will lend individuals money to get necessary repairs their insurance won’t cover.
SBA Loans Take a Long Time to Process
Traditional lending channels can take a long time to process SBA loans. Select lenders, however, can handle approval and processing in-house. By fast-tracking SBA loan requests, small business owners can get the funding they need, when they need it, without any red tape.
At Davis Commercial Finance, we work directly with business owners to provide SBA loans for a wide range of purposes. Whether you need equipment, real estate, assets, working capital, or something else, contact Davis Commercial Finance today and learn more about our SBA loan program.