Almost every business person has heard of SBA loans, but you may not have fully understood exactly what they are. In a nutshell, an SBA loan is not one which is provided by the Small Business Administration itself, but which is partially guaranteed by that agency, so that some other lender will be more likely to approve your loan application.

For the most part, the lenders approving your SBA loan will be part of a large network of banks and other lenders whom the SBA has done business with before, and are on an approved list. In the event that you are unable to repay your SBA loan, the Small Business Administration will pay the agreed-upon percentage to the lender so that the loan isn’t a total loss.

That’s an important distinction because, without the SBA guarantee, many lenders would consider small business loans to be too risky, and not worth their involvement. The downside of trying to acquire an SBA loan is that the SBA itself requires a good amount of documentation and paperwork because they have to be thorough as an organization, in order to minimize their own exposure to defaults on loans.

There are a number of different SBA loan types, and they can range in amounts between $500 and $5 million, with repayment terms ranging between five and 25 years, although a more standard repayment term is 10 years. When you think about applying for an SBA loan, be prepared to invest approximately a month preparing all the documentation, so as to give yourself a good chance for approval.

Qualifications for SBA loans are fairly difficult to meet, and if you can’t pass the following criteria, you probably would not be approved by the agency. Generally speaking, you must have been in business for two years or more, and your small business must generate at least $100,000 in annual revenue. As a business owner, your personal credit score should be at least 640, in order for the SBA to consider your application.

If you can meet all these criteria, and you have the time to spare, applying for an SBA loan can be a great way to grow your business, and achieve long-term success.

SBA loans can help get your business off the ground or can help you take that next big step to business success. Contact Business Capital Providers about arranging for an SBA loan so you can become more competitive in the business world, and achieve those goals you set for your company.