Taking out a loan for your small business can often be a daunting task. How do you know if you’re taking out the right loan? SBA loans are a popular option for small business owners, but why? We’ve highlighted some of the perks of taking out an SBA loan over a traditional loan, so that you can decide for yourself if it’s the right fit for you!
SBA loans are specifically designed to support small businesses, so the requirements necessary to be eligible are applicable to a broad range of businesses. If your business is the right size to qualify as a “small business” and is operating for-profit within the United States, then you’re already halfway there in terms of eligibility. For more information about how to know if your business is eligible for an SBA loan, check out our past blog all about SBA loan requirements.
When taking out a small business loan, a large concern will always be how much the loan will ultimately cost in the long run thanks to interest. That’s why low interest rates can be such a big advantage when it comes to SBA lending. The actual interest rate on a loan can vary depending on your credit and qualifications. But for loans such as the SBA 7(a) loan, there is the potential for interest to get as low as 6.75%, which is far lower than a traditional bank loan. Interest rates for SBA loans also have maximums, which helps to keep costs down for borrowers.
Some business loans come with strings attached as to what you can use the loan for. This can be useful if you already have a specific project in mind when taking out the loan – for example, if you’re specifically looking to buy equipment, you can apply for equipment financing. However, sometimes as a small business, you need money for a range of business aspects. An SBA 7(a) loan can be used for just about anything, from refinancing existing debt to buying land.
Sometimes making big changes in your business requires a big sum of money. With SBA loans, getting access to larger loans is made easier for small businesses. You can borrow up to $5.5 million through the SBA 7(a) loan program, which gives you the ability to finally invest in those larger projects. The reason that the SBA is able to loan such large amounts is by limiting the risk that lenders face by guaranteeing up to 85% of the loans that they issue in case of borrower default. With this kind of insurance, lenders that work with the SBA (mostly banks) can feel more comfortable lending borrowers multimillion dollar sums.
Getting an SBA loan without any assistance can be difficult. There’s a lot of paperwork involved and wait times can get long. But as a Grasshopper client, you can gain access to resources that can help make applying easier and speed up the process of getting the funding that you need. For additional information regarding the SBA loan application process, connect with a member of our SBA lending team.
Brana Webb is a versatile marketing professional with a decade of experience leading brand, content, and digital strategies across industries ranging from financial services to consumer goods. With 8+ years of experience driving brand growth and customer engagement across the banking and fintech space, she has developed a strong track record of translating complex ideas into compelling campaigns that resonate with target audiences. In her current role at Grasshopper, she leads strategic marketing initiatives that support product launches, deepen client relationships, and fuel business growth. With a background spanning both in-house and freelance work, Brana brings a thoughtful, creative, and data-informed approach, helping teams connect more meaningfully with their audiences and move faster toward their goals.
