Small Business Administration (SBA) Loans.
"7(a)" loans are the most basic and most used type loan of the Small Business Administration's business loan programs. It's name comes from section 7(a) of the Small Business Act, which authorizes the agency to provide business loans to American small businesses. The loan program is designed to assist for-profit businesses that are not able to get other financing from other resources.
How They Work.
SBA provides loans to businesses - not individuals - so the requirements of eligibility are based on aspects of the business, not the owners. All businesses that are considered for financing under SBA's 7(a) loan program must: meet SBA size standards, be for-profit, not already have the internal resources (business or personal) to provide the financing, and be able to demonstrate repayment. Certain variations of SBA's 7(a) loan program may also require additional eligibility criteria. Special purpose programs will identify those additional criteria.
SBA Loans typically have rates & fees comparable to non-guaranteed loans.
They said it, not me. The rates and terms of SBA loans are based on factors essentially identical to those in the merchant cash advance industry.
They May Take A While To Come Through, If Ever.
I've personally spoken with business owners whom share experiences of waiting over 6, 7, 8 months for an SBA loan, only to have their deal killed for one reason or another. We see deals die every day in the business funding industry, and for multiple reasons. Typically, when money's cheaper, the requirements to obtain it are more stringent, making it harder to secure an SBA loan than it is to secure a merchant cash advance, or MCA. The difference in business funding, is that approvals are given in minutes versus months, and funds are immediately available. Many merchants have had a deal get killed, and been funded the same day by another lender. The disappointment is much greater if you've been counting on and waiting for capital for months and months, only to not receive the funds after the wait.
If you don't qualify for an SBA, or if you have opportunities that you want to seize immediately, there are lenders eager to make similar business-based loans in the private sector. Funds can be obtained the same day, in most cases, and since the metrics weigh most heavily on the business, bad and even poor credit is typically not an issue.
I hope you found this information to be valuable. If you think your business could benefit from a Merchant cash advance, or other type of loan product, visit https://funderhunt.co, the business funding marketplace, and avoid broker fees altogether.
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