If you’re a small business owner seeking financial support, a Small Business Administration (SBA) loan could be just the thing you’re looking for. These loans come with generally favorable terms and can help you grow your business, cover operating expenses or invest in assets. SBA loans are backed by the federal government but offered through lenders such as Cadence Bank. Let’s look at how to qualify for an SBA loan.

Business Eligibility Criteria

Before you embark on your SBA loan journey, make sure your business meets the requirements:

1. For-profit venture. Your business must operate for profit.
2. United States or US Territories. You business must be physically located and operate within the US or its territories.
3. Creditworthiness. Your business should not be burdened by bad credit.
4. Other options unavailable. To qualify for SBA loans, other means of financing from non-government sources must be exhausted before most SBA loans will be approved.

Types of SBA Loans

The SBA offers various loan programs. Here are three of the most common ones:

1. SBA 7(a) Loans: These loans guarantee portions of the total amount, cap interest rates and limit fees.
2. 504 Loans: These provide long-term, fixed-rate financing for purchasing or repairing real estate, equipment, machinery or other assets.
3. Microloans: These are the smallest SBA loan program, providing $50,000 or less. They may be more ideal for small startups.

Why Choose SBA Loans?

SBA loans come with benefits that make them attractive compared to other financing options. They have competitive terms, rates and fees. Some SBA loans come with ongoing counseling and education to support you as you manage your business. SBA loans may have lower down payments and no collateral needs compared to non-government loan sources.

Watch Out for Predators

Protect yourself from predatory lenders by looking for warning signs. Some lenders may impose unfair and abusive terms on borrowers through deception and coercion. Watch out for interest rates that are significantly higher than competitors’ rates or fees that are more than 5% of the loan value. Make sure the lender discloses the annual percentage rate and full payment schedule.

A lender should never ask you to lie on paperwork or leave signature boxes blank. Don’t get pressured into taking a loan from anyone.

If you’re interested in an SBA loan, Cadence Bank can help! Cadence has a Preferred Lender (PLP) status with the SBA. This translates to a faster, more streamlined process to get you the capital you need. Ready to learn more? Visit us online to contact a member of our SBA loan team today.

Sources:

https://www.sba.gov/funding-programs/loans/lender-match-connects-you-lenders

https://www.sba.gov/funding-programs/loans

https://www.forbes.com/advisor/business-loans/what-is-an-sba-loan/

https://www.nerdwallet.com/article/small-business/small-business-loans-sba-loans

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.