Frank X. Acocella, CounselPro Lending, on SBA Loans

The Small Business Administration (SBA) is a resource for anyone who owns a small business. The SBA has given millions of loans, loan guarantees, contracts, and other forms of assistance to small businesses since 1953. They provide assistance through four programmatic functions: access to capital (business financing), entrepreneurial development (education, information, technical assistance & training), government contracting (federal procurement), and advocacy (voice for small businesses).

Partially guaranteed by the government, an SBA loan is a small business loan that eliminates the risk for the financial institution which issues the loan. The Small Business Administration is not the one who is lending the money but works with a network of approved financial institutions to find businesses the loans. They will back up a part of a loan that a small business receives, and if you are unable to pay back the loan, the lender knows that the SBA will cover the guaranteed portion.

SBA loans range in size from $500 to $5.5 million and can offer APR rates as low as 6.5% and have varying repayment terms. The standard loan repayment length is usually ten years. It’s important to apply for an SBA loan three weeks before you need the loan. The more time you have, the better it will be. If you need the money right away, an SBA loan won’t be the best option for your business.

While SBA loans are difficult to qualify for, they also come with a handful of general minimum requirements that is important for funding. If your business meets the following minimum requirements, an SBA loan might be good for you:

• 2+ years of business history to the person applying
• A personal credit score of 640+
• Your business has $100,000 annual revenue

Sometimes you might not meet the minimum requirements for the loan, but it does not mean you will not ever be able to apply for a loan with the SBA. Once you build up a great credit score, longer business history, and larger business revenue, apply for the loan again. It’s possible that the second time around you’ll be able to receive the extra funding you’re looking for.

Sometimes a small business loan through the SBA is not a realistic funding choice for your business. Some businesses will have to find funding through other sources. If you are looking for a loan for your business, contact Frank X. Acocella at CounselPro Lending and find out if you qualify for funding.