If your business doesn’t have the capital necessary to run, you’ll find that you won’t be in business long. With so many loan options to consider to get the cash you need, you might be unsure where to look. SBA Loans are a popular choice for many small businesses because of their flexibility and ability to lend to businesses that other lenders might view as too high risk. Here are four benefits of getting an SBA loan. 

1. Get Approved for Large Amounts of Capital

Banks are sometimes hesitant to lend large amounts of money to new businesses. However, depending on the SBA loan you choose, you could get approved for as much as $5.5 million. Banks feel more comfortable lending money through the SBA because the government guarantees up to 85% of their loans. Because the SBA backs the loans, you’re automatically considered less of a risk and can get the funding you’re looking for. 

2. Lower Interest Rates

Interest rates are a significant concern for businesses taking out loans because they can add tens of thousands of dollars to your loan over the life of it. Interest rates on SBA loans are traditionally the lowest lenders can offer. However, the rate you get approved for will depend on your qualifying factors, such as how much collateral you have, time in business, and business credit score. 

3. Smaller Down Payments

While loans and down payments often go hand in hand, loans through the SBA generally require lower down payments, with some types of loans not requiring any down payment at all. Traditional bank loans often require you to put down as much as 30%, tying up a great deal of your available capital. However, loans through the SBA that require a down payment typically only ask for 10-20%. The higher your risk factors are, the higher your required down payment will be. 

4. Better Repayment Terms

If the repayment terms on a loan aren’t something you can handle, then the loan could do more harm than good. Many banks give short repayment terms that can put a strain on your company. Additionally, they can require payments daily or weekly. However, SBA loans have some of the longest repayment periods and a payment schedule that won’t stress you out. Their loans typically require monthly payments over as long as 25 years, depending on the chosen loan. 

When exploring loan options for your company, it’s essential to understand the benefits they can offer you. After learning about the advantages of an SBA loan, you’ll find it could be just what you need.