Frequently Asked Questions
Small business loans can get complicated. If you’re someone who is seeing a lot of terminology you don’t understand, you might have some questions. To help clarify some common issues, we’ve developed a section covering the most frequent questions that we receive.
If you want to be a responsible business owner, it’s important to understand business loans and how they work. There are more financing options than ever – you just need to understand them.
Below we have divided our FAQ into four different categories:
This section is dedicated to questions about Small Business Association (SBA) loans. If you have any questions about this form of loan, check out the different questions below:
How to get an SBA loan?
To obtain an SBA loan, you need to find a lending institution that partners with the SBA. You receive funding for SBA loans via traditional lenders and community lending organizations. There are hundreds of lenders that provide SBA loans.
How do SBA loans work?
SBA loans are simply small business loans that are guaranteed by the SBA – a government department. You apply for an SBA loan through a traditional lender or institution. The only difference is that they require additional paperwork.
How to apply for SBA loan?
To apply for an SBA loan, search for a local or online lender that provides SBA loans. You can apply for an SBA loan in-person or online. You simply need to select a lender that works for you – make sure to have your business’ financial information ready.
How to qualify for SBA loan?
SBA loan qualification requirements will depend on the individual lender – requirements are slightly flexible, depending on the lender you choose. For the most part, you’ll need a solid payment history, 680+ credit score, a business plan, and at least 10% for a down payment.
How hard is it to get a SBA loan?
SBA loans are actually easier to get than traditional loans – that’s the whole point. The federal government guarantees the loans to help small business owners gain access to capital.
How do SBA disaster loans work?
SBA disaster loans are low interest loans provided to small business owners in locations that experience natural disasters. If approved, you can use the funds to cover costs from damage and other issues resulting from disasters.
How long does it take to get an SBA loan?
The one downside of SBA loans is that they take a bit longer than some traditional forms of finance. Because of the amount of paperwork and relevant checks, you can expect to wait 60 to 90 days for an SBA loan.
How to get a SBA 7a loan?
Simply find a lender that partners with the SBA and submit an application that includes your business data and information. Each lender will have slightly different requirements.
How to get an SBA loan with bad credit?
It’s not easy to get an SBA loan with bad credit – you will need to find a lender with lower requirements. Online lenders are typically the best option for those with bad credit.
How to get a SBA loan without collateral?
It’s possible to get an SBA loan without collateral, but you’ll still probably need at least 10% of the loan as a down payment.
How long are SBA loan terms?
SBA loan terms depend on what you’re borrowing for. They’re 25 years for real estate, 10 years for equipment, and 7 years for working capital.
What is an SBA loan?
An SBA loan is a small business loan that is guaranteed by the Small Business Administration. It can help startups small business owners gain access to capital.
What is a SBA 7a loan?
An SBA 7a is actually the traditional form of SBA loan. This is typically used to borrow working capital.
What is SBA 504 loan program?
This is a form of SBA loan that is typically used to purchase assets, such as heavy machinery or real estate. They have longer terms than other SBA loans.
What happens if you default on SBA loan?
The consequences are fairly similar to any other loan default. Assets and capital will be seized through collections to repay the debt.
What can SBA disaster loan be used for?
You can use SBA disaster loans to cover disaster related costs to real estate, personal property, economic harm, machinery, equipment, inventory, and more.
What are the characteristics of successful SBA loan applicants?
Solid payment history, above average credit score, solid business plan, and organized financials. You should be prepared with as much information possible – SBA loans are paperwork intensive.
What is the success rate of SBA loans?
It is hard to determine a figure – every lender has different requirements and success rates. Make sure to ask about requirements prior to applying.
What is an SBA disaster loan?
An SBA disaster loan is a low-interest loan from the Small Business Administration given to small business owners in post-disaster areas. They can be used to cover costs and damages.
How to Obtain Business Loans FAQ
This section overviews questions about business loans and how to obtain them. If you’re in the market for a new business loan, check out some of the questions below:
How to get a business loan?
First you should choose the type of loan you’re looking for. Next, research potential lenders and apply online or in-person.
How to get a small business loan?
Organize your business financials, prepare your credit score, choose a lender, and apply online or in-person. Organization will help improve your chances.
How to get a startup business loan?
It can be hard to obtain financing as a startup – either find a lender who works with startups, or consider an SBA loan.
How to apply for a business loan?
Simply find a lender that you qualify for and apply for funding. Make sure you have all your business and personal financial information on-hand for the application.
How to get a business loan with bad credit?
It can be hard to obtain a business loan with bad credit. If you don’t have collateral to use to aid the application process, you might have to apply for an SBA loan instead.
How do business loans work?
Business loans allow you to borrow money against your business instead of your personal assets. They’re used for business costs, assets, and working capital.
How easy is it to get a business loan?
If you have a long business history and solid financials, it can be quite easy. If you are a new business owner, it can be much more difficult – especially with brick-and-mortar lenders.
How to qualify for a business loan?
Qualifying for a business loan will depend on the lender that you’re working with. Your business has a credit score, which lenders will use to determine if you qualify. If your business is just getting started, some lenders will use your personal credit score instead.
How hard is it to get a business loan?
This depends on what you’re looking to borrow for, who you’re borrowing from, and what you’re borrowing history looks like. The better your credit score and the more secure your assets, the easier the borrowing process will be.
Where Business Loans Come from FAQ
If you’re interested in where you can obtain business loans, this portion of our FAQ section is devoted to you:
Where to get a small business loan?
You can obtain a small business loan from most traditional lenders, credit unions, commercial banks, peer-to-peer lenders, and online lenders.
Where to get a loan to start a small business?
Most lenders provide small business loans – brick-and-mortar banks often have commercial divisions. You can also use credit unions, online lenders, micro-lenders, and peer-to-peer lenders. SBA loans are also a good option.
Business Loan Specifics FAQ
If you have specific questions about business loans, our top questions below will be able to help you out.
What do you need to get a business loan?
To obtain a business loan, you typically need a borrowing history, business plan, financial data, and a 10% down payment.
What is a small business loan?
A small business loan is simply a loan that provides small business owners with capital to use for various business related expenses or purchases.
What does it take to get a business loan?
This will depend on the lender. You typically need your financial history, credit report, a down payment, a business plan, and additional business information. Sometimes you will also need collateral.
What is the average interest rate for a business loan?
This will depend on the lender and your credit worthiness. It will also depend on whether your loan is secured to an asset or not. The average rates are around 4-6%.
What is the best way to get a business loan?
Research lenders and apply for funding – make sure you prepare your personal credit score and improve your ability to apply for financing. Apply online or in-store.
What is the interest rate for a business loan?
This will depend on the lender – each will have different requirements and interest rates. The average is around 4-6%.
What is the best bank for small business loans?
This depends on a variety of factors including your credit background, the amount you want to borrow, your industry, your length of operation, and more. You need to assess what YOU value in a lender before you can answer this question.
What happens if I don t pay my business loan?
Similar consequences that would occur if you defaulted on a traditional loan. If it is secured, the asset will be claimed and sold to fund the loan. In some cases, your personal assets may be at risk of seizure as well.
What is the interest rate on a business loan today?
This depends on which lender you work with and if you use an SBA loan or not. The interest rates on business loans typically fall between 4-6%.
What is SME business loan?
SME simply stands for ‘Small and Medium Enterprise’ – it is a subsection of finance that provides capital for small and medium sized businesses.
What can be used as collateral for a business loan?
Almost anything of value. Some people use their homes, others use property owned by their businesses. This can include property, heavy machinery, equipment, and more. Remember – if you use personal assets, you may put your family’s financial security at risk.
Need More Information?
If you haven’t been able to find question to your answers on this page, make sure to check out some of our other content. Our website is dedicated to helping our readers understand small business loans and other forms of business related finance. We have in-depth information about almost every topic you could imagine – check it out!