Good Funding vs. Bad Funding
There are many ways to get your small business going successfully, but at the same time there are a number of pitfalls you’ll want to be sure to avoid. One of the main places a business can hit a trouble spot is in its financing. Here’s what you’ll want to know about SBA loans, and how they can help successfully fund your business.
Do consider the use of SBA loans when financing your business. Don’t take the risk of using your personal savings. Small Business Administration loans (SBA) are guaranteed by the SBA, which is a federal agency. This allows them to be offered at flexible terms with lower interest rates compared to other types of loans. That’s certainly a better option than spending your personal assets.
Do consider a loan plan that works for your needs. Don’t take out a loan type that can’t be used for your project. Different loans are designed to help with different types of investment. One kind may be better for purchasing equipment while another is better for a real estate investment. Do your research to find the loan with the terms that fits the project you are actually going to use the funds for. If you believe you may need to funds for multiple projects consider a loan type that allows for that.
Do consider the terms that work with your business. Don’t get locked into a payment schedule that hinders your company. Different loan types have different terms, payment schedules and interest rates. For many SBA loan types a longer term may mean lower monthly payments and interest rates. If you’ve taken out a large loan this may be to your benefit since it will leave your company with cash available for other business needs. On the other hand a small loan you can pay back quickly may be better if you have a large project planned for the future where you will need to devote all of your attention. Consider your business type and which will work best for you in both the short and long term when making your decision.
There are a number of ways choosing SBA loans can be beneficial for your business. From their federal guarantee by the SBA to the number of loan types available, an SBA loan can be found to fit most needs. Remember to consider your business structure and which loan type will be the best fit when making your decision, and if you have any questions at all, talk to a professional.
