SBA Loans and Financing Your Business

Men signing agreement: Financing Your Business: Essential Funding Strategies

The prospect of buying an existing business can be pretty exciting. However, you must overcome a few major hurdles to turn your entrepreneurial dreams into reality. 

Most notably, you must find a way to finance the business you want to buy, which can sometimes be easier said than done. Fortunately, a talented team of business brokers like those at Sunbelt can provide guidance on how to obtain an SBA loan, one of the best financing options for entrepreneurs.

In addition to being one of Sunshine State’s premier SBA financing experts, Sunbelt provides a host of other services. Specifically, they specialize in  assisting business owners who are ready to sell their businesses. Connecting buyers to the established businesses listed with Sunbelt is what Sunbelt does best.

But enough about us — let’s turn our attention back to SBA loans and outline some common eligibility requirements.

What Is an SBA Loan?

SBA loans are a specific funding opportunity that is provided via programs backed by the Small Business Administration. 

The SBA is a federal government entity that was created in 1953 for the purpose of providing financial assistance to small and emerging businesses. In addition to capital, the SBA provides entrepreneurs with guidance, advocacy services, and other resources.

SBA startup loans are not provided to business owners directly, but the administration will provide disaster relief funds under certain circumstances. Generally, it guarantees loans against default in order to incentivize banks to issue funds to aspiring business owners and small companies.

There are several types of SBA loans. The most common SBA loan is known as a 7(a) loan, which is designed to finance new businesses. The maximum amount of funding available via this loan type is $5 million. Additional SBA loan types include:

  • Growth loans
  • Disaster relief loans
  • Microloans
  • Express loans

Of these, only 7(a) loans can be used to buy or launch a business. The other funding opportunities are designed for specific purposes. For instance, growth loans provide established businesses with the funds necessary to expand their operations.

What It Takes to Qualify

As with all federally backed loans, lenders must adhere to certain requirements when issuing SBA 7(a) loans. Otherwise, the loan may not be guaranteed against default by the SBA. In order to qualify for SBA loan assistance, businesses must:

  • Meet the SBA’s definition of a small business
  • Plan to operate for a profit (nonprofits are ineligible for funding)
  • Have equity invested in the business
  • Demonstrate a need for the funds
  • Propose to operate in the U.S.
  • Explore alternative financing opportunities before requesting SBA funds

For inexperienced business owners, filing for and obtaining SBA funds on their own can be quite complicated. That is why many entrepreneurs partner with experienced business brokers like Sunbelt when launching their small businesses.

Benefits of Working with a Well-Connected Business Broker

If you are interested in obtaining an SBA loan to finance your business, Sunbelt can help you navigate the lending process. Our experienced team of business brokers has long-standing partnerships with dozens of financial institutions. In addition, we have access to niche banks that provide financing to specialized types of businesses.

To learn more about small business financing opportunities and our suite of services, contact Sunbelt today.