Operating your own business can be financially challenging and draining for virtually anyone who wants to get started. Because the funds to rent or own a brick and mortar facility can be a big strain on the small businessman budget, the need for new finances can be a huge barrier in being successful. This is because building up a business in today’s environment requires significant amounts of finances, during the start up and years after.
1. Reasons for Borrowing a Small Business Loan
To prevent a new or existing business from folding prematurely, the small business man may decide to borrow a small business loan. Borrowing a small business loan may be essential for a number of different reasons so it is important for the owner to determine what purpose or purposes they need this financing for. If you want to know what 3 things this loan can be used to do, you will need to make sure that you are reading the actual terms of these loans.
2. Four types of Loans Offered by the Small Business Association (SBA)
To determine what the money can be used for after it has been approved, you will need to consider what type of loan that you have requested. Because the SBA offers at least 4 different types, you will need to pick and choose in advance which some small business loans evans co types will suit you. The four different types that are currently being made available via the SBA are as follows:
1. 7(a) – loans that have been set aside for those who need a loan that is common flexible and basic
2. Microloan program – loan amounts that have been set aside for small loan amounts – Normally, applied for approval by both existing companies who are growing and new business ventures
3. Equipment and Real estate – loan amounts that have been set aside for larger long term amounts
4. Disaster loans: loan amounts that have been set aside for low-interest rates used for disaster (can be used from machinery to real estate).
3. Application Approval Dependent on Several Different Factors
If you want to apply for a small business loan, you need to do your research first. Because these loans are only approved when the business owner meet certain types of criteria, the owner needs to make sure that they are prepared in advance to meet them. It is also important to note that this agency will require specific documents for the loan before it can be approved. For instance, if the small business owner has been in business for quite some time, this agency may ask for information and supporting documentation as back up proof and the financial statements that shows exactly the status of the present business venture. There are a few things that these agencies representatives will need to know about the business to ensure the company is eligible for the loans that they are applying for like business owners’ personal credit score, Must have a history of being in business at least 2 years, and Security for the loan based on the loan type.