SBA loans are issued to help small businesses get off the ground, expand or stay afloat. Guaranteed by the government, these loans offer debtors low-interest rates and flexible loan terms.
Many financial service providers in Ogden like the Wasatch Peaks Credit Union offer different types of SBA loans for your business needs. The three primary SBA loan categories are the 7a, 504 and microloans. These loans differ in terms and conditions, and finding the best type for you is paramount to the success of your business. That said, below are some factors that will influence your loan choice:
Your credit score
As a small business proprietor or someone looking to start or expand a business, you should aim for a high personal credit score. Lenders take into account the credit score of anyone with at least 20% interest in any business before giving an SBA loan. The 7a and 504 loan programs require borrowers to have a minimum credit score of 700. You may get microloans with lower credit scores, but they might attract higher interest rates.
What you intend to use the loan for
If you are looking for a loan to pay for your workers’ salaries, buy equipment and property, the 7a loan is the ideal option. For long-term needs like land and buildings, and business expansion projects, the 504 loan will work for you. You can use microloans for various business purposes but not for property purchase.
Your lending institution
Both the 7a and 504 SBA loans are processed through credit unions, banks and specialized lenders. You can borrow up to $5 million under these programs. The microloans are managed by community-based non-profit organizations. You can borrow up to $50,000.
The application process for SBA loans is quite thorough. You should pay close attention to your application details and ensure you have all the necessary documents. Your business plan also determines the success of your application. Ensure your plan is solid and well researched.