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“Busting 6 Common Common Myths About Small Business Administration (SBA) Loans!”

Let’s face it, successful business owners can find themselves strapped for cash and needing a small business loan to expand operations, fund capital investment or address a cash-flow shortfalls.

Firstly what is an SBA Loan?

The term “SBA loan” is actually a misnomer.

SBA doesn’t give out loans.

YES! The purpose is to serve and facilitate a relationship between lenders and borrowers…

Dear Business Owner,

The U.S. Small Business Administration or SBA, is a federal agency providing loan guarantee programs.

The SBA was established to help businesses which may not be able to get traditional bank loans.

Traditional bank loans offer long-term and low interest rate funding.

The SBA has a number of loan programs designed specifically for small and medium sized businesses…

Including microloans, SBA 7(a) loans, and CDC/504 loan program.

Ok, so far we’ve established the SBA works with lenders to provide loans to small businesses.

The agency doesn’t lend money directly to small business owners.

It sets guidelines for loans made by partnering lenders, community development organizations and micro-lending institutions.

The SBA guarantees the loans will be repaid which eliminates some risk for lending partners.

The biggest most costly mistake is not knowing the program that’s the right fit for your business…

Yes! Despite an abundance of resources to help small businesses navigate the lending landscape.

The borrowing process remains shrouded in mystery for so many small business owners.

Here’s what the financial and business experts don’t want you to know about small business lending.

1. Banks are the only source of loans for small businesses.

Though traditional banks and credit unions provide the bulk of small business loans…

There are a wide variety of alternative lenders which make funding available in a fraction of the time.

Business owners should evaluate all available financing options before accepting a loan offer.

It’s true, every lender offers different terms which often makes it difficult to compare apples to apples.

Effectively finding right loan which addresses business needs with current financial situation requires…

Experience and expertise of someone who works in the space every day.

And can help navigate pros and cons of any loan offer…

2. You must have perfect credit to qualify for a loan.

Credit score both business and personal is the top factor used by traditional lenders.

Alternative lenders determine whether a business qualifies for a loan.

Your score provides a quick assessment of how you’ve paid bills in the past…

This doesn’t shows how you’ll pay them in the future.

If the credit score is less than perfect they should spend time needed to improve the score.

In as little as six months of consistently making payments on time…

And good judgement in using credit, business owners can improve their score by as much as 100 points.

When your credit score is too low to secure a traditional loan…

You could use an alternative lender which may be willing to provide a small loan while you rebuild your credit.

3. The process is long and cumbersome.

Fear of the unknown often stops business owners from even exploring their options.

A lot of small business owners delay loan process because they think it’s going to be difficult or take too long.

So business owners are forced to fund their business with credit cards.

And they deplete all of their personal net worth until they’re desperate.

However, the longer they wait the harder it is for us to help them…

The U.S. Small Business Administration recently simplified its loan application and underwriting process.

This means borrowers can secure SBA loan in about the same time as a conventional loan.

4. You can apply directly to the SBA for a loan.

Because the SBA doesn’t lend money directly…

Business owners must apply for these loans through SBA approved lenders.

This includes banks, credit unions and non-bank lenders.

To streamline SBA loan process make sure you are interacting with key decision makers at lending institution.

If you’re dealing with a salesperson you’re likely to be strung along until decision maker sees complete package.

The means if there’s a potential no the business owner has wasted valuable time and resources.

5. The more money you ask for the less likely you are to get approved.

Though it may be true in some cases…

This isn’t an ironclad fact.

The truth is lenders consider numerous factors.

This includes available collateral, cash flow and revenue projections.

All those factors are considered before deciding whether or not to approve a loan request.

That’s why it’s important to realistically assess the amount of funding required.

Not asking for the right loan amount is a common mistake.

A borrower who wants to purchase new equipment may not have considered they probably need working capital.

And they might need to purchase additional inventory.

What if that pushes the loan amount beyond a bank’s comfort zone?

It mght mean the business owner is out of luck.

Ask about shorter-term loan with option to renew (at potentially higher rate) when you’ve payed off first loan.

This may make it easier to leverage funding from another source.

6. Only struggling businesses should apply for a loan.

Many highly successful business owners want small business loan to support expansion plans…

And operational improvements…

May be to serve as a temporary financial bridge during a challenging season.

In fact, financial specialists agree the right time to prepare for a loan is before you need one.

It’s a lot like learning how to swim before the boat sinks.

Thankfully, you don’t need to be a financal genius to make funding alternatives work for you.

In addition to banks, there are more business loan options available to small business owners.

And traditional financing sources are no longer the only or best way.

The choices available to meet specific needs of many small business borrowers has changed.

Yes! To find out more click here to take the small businesses loan quiz now…