Small Business Loans | Advance Funding Partners

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Sometimes your small business may need a loan to fund things like an expansion, working capital, or equipment purchases

These purchases may require a lot of money upfront without much return on investment in the short term. In cases like this, you should consider a small business loan. A small business loan is backed by the U.S. Small Business Association (SBA), which sets guidelines for the loans and reduces the risk for lenders. This makes it easier for small business owners to get the money they need and to know what is required to qualify.

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    Small Business Loan Basics

    There are three main types of SBA-backed small business loans:

    • 7(a) loans, which have a cap of $5 million and can be used for things like real estate, fixed assets, and debt refinancing.
    • 504 loans are typically used for major fixed assets and have a cap of $5.5 million.
    • Microloans are capped at $50,000 and cannot be used for real estate or paying off debts.

    Generally, to qualify for a small business loan, your small business must:

    • Be a for-profit business
    • Be located and operate within the United States or its territories
    • Have equity invested by the business owner, either time or money
    • Not be able to obtain funds needed internally or from another lender
    • Qualify as a small business as defined by the SBA
    Small business loans are often preferred for their low fees and competitive rates. They often result in a far lower APR than you would get from a non-SBA-backed loan. Small business loans also offer generous term lengths, ranging from 10-25 years, depending on what the loan will be used for. The loan amounts of SBA loans are also much greater than other online lenders, or banks will offer, with caps up to 10 times as high.

    Obtaining a small business loan

    If you qualify for a small business loan, it is easy to get all the money you need at once at a great rate. However, it is often difficult to qualify for an SBA loan. You will typically need to prove strong business finances and have good credit history over several years.
    In addition, these loans are sometimes very slow. It could take up to three months for you to be able to access funds after being approved. SBA loans also typically require an unlimited personal guarantee from anyone who owns at least 20% of the company and may also require collateral from the business owners.

    Because of this, small business loans are often best for purchases that aren’t needed immediately and will also provide a high ROI in the long run, though often not right away. This includes purchasing real estate or significant fixed assets, paying debts, or refinancing loans at much higher rates.

    If your business qualifies according to all of the listed criteria, getting started is as easy as getting your documents and paperwork in order and sending them to a lender who offers SBA-backed loans. Then you should be prepared to wait for a bit because the approval and funding process can take up to a couple months.

    If you think a small business loan is right for you, don’t hesitate to reach out to us at Advance Funding Partners today. As experts in our field, we’re determined to get you the financial results you need, including getting you pre-approved for your small business loan within 24 hours.