Smaller companies have the fantastic option of applying for an SBA loan when they want to expand their company. These are a good choice for gathering credit for your company, but they of course come with a few advantages and disadvantages you will need to think about. Let’s take a look at some of the ones you should consider if you are thinking about applying for this type of loan.
Image Source: Pixabay
Pro – Lower interest rates
This type of loan typically does not come from a traditional lender, though you might be able to acquire an SBA loan through your bank. It most often can be found coming from a government agency or some other similar group. This means that they can afford for the interest rates to work more in the favour of the applying company as there is less risk to the lender. This means that you will frequently find that SBA loans have lower interest rates compared to others.
Con – Longer Approval Times
Sometimes, SBA loans can take a little longer to approve. Many businesses apply for this type of loan, but some will be left waiting a long time for approval. Some may even think it better to pursue other forms of lending if it will get them a return faster. However, there are plenty of SBA express loans that you could apply for if this is the style of loan that you want, but you don’t want to get caught up in long approval times.
Pro – No Collateral
When applying for bigger loans, you often have to put forward items to be used as collateral. These tend to be ones with a strong monetary value, such as your house or your car or part of the business. Though you should have no problem making the repayments, it can still be very intimidating to have to do this. However, SBA loans do not need collateral since they tend to be for smaller amounts.
Con – Smaller Loans
One important thing to remember is that SBA loans are not going to be for the biggest amounts of credit. If you need a substantial loan, you are going to have to go for something more akin to a secured or unsecured loan to get you the amount you are looking for. Instead, an SMA loan tends to be for much smaller amounts, and loans may even be capped in some scenarios.
There are so many types of loan to choose from, but SBA loans can be a great option for those who run smaller businesses. Anyone who is thinking of applying for such a loan needs to be aware of some of the nuances that go into applying for this type of fund. As can be seen from above, there are several things that you need to consider when trying to work out if this is the right loan for you. However, this type of loan could be a brilliant choice for small business owners who are searching for the right type of funding for their company.
