The Small Business Administration understands how difficult it is for small businesses to obtain financing under competitive terms. Although the SBA doesn’t actually offer small business loans, it does have loan programs that level the playing field. The SBA backs the loan, reducing the risk for the lender. This doesn’t leave the borrower off the hook, just gives small businesses better terms and rates to get a loan.

Here are five key things you should know about small business loans:

  • Small businesses are defined as having less than 500 employees and less than $7 million in annual receipts. A lot of businesses qualify for small business loans, even if they don’t seem small.
  • The 7(a) loan program has some specialized programs for companies that are interested in exporting, located in underserved or rural communities and military veterans. The loan application is similar to a traditional bank loan. It can be complex, but consider the long-term savings with lower interest rates.
  • The SBA offers a microloan program. Typically, these loans are for less than $50,000. Although the money cannot be used for purchasing real estate, it can be used to purchase supplies, inventory, machinery or furniture. This type of loan often has less stringent requirements than a traditional loan and can be easier to obtain.
  • Women and minority entrepreneurs can get a great deal of assistance from the SBA about small business loans. From mentors to advise to information about loans and grants, it pays to use the resources in your local SBA office.
  • The SBA offers low-interest disaster loans in disaster areas for small businesses affected by a tragic event.

For help securing an SBA loan, contact IRC Commercial Lending today.