How Small Businesses Benefit From Commercial Lending

As part of the commitment to the expansion of small businesses throughout the country, most lending agencies participate in the programs offered by the federal Small Business Administration (SBA). For the last 40 years, the SBA has provided more than $6 billion to thousands of American-owned small businesses.

To help promote the development and growth of small businesses, the SBA guarantees loans made through the various lending institutions, nationwide. How the SBA assists in the commercial lending process is, though they don’t make loans directly to the businesses themselves, it sets the parameters for the loans made by the lenders, which includes banks and alternative financing companies. Basically, the SBA guarantees a certain percentage of a loan, thereby lowering the risk to the lenders and increasing the possibility that small firms will get the funding they need.

In order for a company to qualify for an SBA, it must meet particular criteria in that it must be in a for profit field, have a certain financial standing, have good credit and be able to meet particular size requirements in qualifying that it is indeed a small business. However, an SBA loan cannot be made if a borrower has access to another kind of financing that provides reasonable terms. What this means, essentially, is that you have to first apply for a loan from another commercial lending agency or alternative financing company and then be turned down for it.

Some of the advantages of an SBA loan often include a longer repayment term, possibly up to 25 years, and a lower down payment than a traditional bank loan. The huge benefit to both of these is that they enable small businesses to spend less on debt repayment and to keep their cash flow to cover operational costs. In addition, an SBA loan offers variable and fixed rate options with no balloon payments. The majority of for-profit businesses are eligible to participate in the SBA’s commercial lending program.

There’s an SBA loan for almost any business need. In fact, there are five different types of loans for small businesses in nearly any for-profit field. Many small business owners use these loans for debt refinancing, construction purposes, business expansion or acquisition, commercial real estate purchases, working capital or to buy more equipment or inventory. A loan from the SBA can range anywhere from $25,000 to upwards of millions of dollars.

For commercial lending purposes, there really isn’t another lending institution that can compete with the Small Business Administration in terms of benefits to the small business owner. Take a look at one of the online lenders on how to apply.

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