Bad credit shouldn't stop you from financing your small business

October 12, 2022

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Master ImageEveryone has a project that they would like to achieve, some of them more ambitious than the others, but at the end of the day they are all very likely to need money to start running. A good amount of capital is always necessary for building the foundations of any kind of business in general. A lot of people tend to think that they are not eligible for getting loans because of bad credit history, but this shouldn't stop you from financing your dreams. Here is where the Small Business Administration (SBA) comes to the table:

SBA is an agency within the federal government that helps support all kinds of entrepreneurs and small businesses. It is the only federal agency completely dedicated to the support and counseling of small businesses in the United States. Their purpose is to support these businesses to help the economy grow as a whole. It was created in 1953 and since then it provides a variety of different benefits for American small businesses: They have coach assistance, special centers where people can get help and advice from different entrepreneurs and coaches, education on money administration and different kinds of business related topics.

So, what is an SBA loan?
SBA loans have a focus on startups and small businesses principally, this is why they are more flexible towards who they will be lending money to. An SBA loan is a small business loan that helps cover up for startups, real estate purchase, and working capital needs in general. Of course, they will look forward to checking on your overall business plan and key aspects of your project for determining if it makes you eligible for a loan. But keep in mind that their goal is to help small businesses rise. A lot of institutions depending on sociological and market conditions decide to not give loans to different sectors, like during the Covid-19 pandemic, restaurant businesses were majorly denied loans because of the sanitary conditions. But, the SBA, as mentioned before, is more flexible, and they lend money in all sorts of conditions for supporting the growth of small entrepreneurs.

What are the pros of it?
Because this is a federal agency, you have a big chance of securing your loan through a lending institution.
SBA loans have a lower down payment requirement, in some of them you can qualify as low as a 10% down payment. This is extremely beneficial for financing your project.
Payments in an SBA loan can be extended over a big period of time, and thus your payment can be lowered by this.

What are the cons?
For securing an SBA loan you are going to have to pledge one of your personal assets just in case you don't make your payments they can go through it to recoup the money.
The process of an SBA loan can be a very slow process which could take several months.
The SBA fee consists of 1 or 2 percent of the transaction. This is done to support the SBA program, so it can keep going

How does it work?
The loans and lines of credit that the SBA offers are very similar to the conventional business loan you can get from a bank. The whole process begins when an entrepreneur or business owner does the application through the agency, then the borrower safeguards the funding and pays it back over time with the interest fee of the specific loan.

How can you get an SBA loan?
Getting an SBA loan is a very secure and motivating way to fund your projects and finance your business ideas. To get it, you have to fill the requirement to provide an extensive financial documentation and the already mentioned business plan to both the SBA and the lender. This information allows the SBA to determine if you are eligible, to see if the loan is a good fit for the interest of both parties.

Why should you get an SBA loan?
In conclusion, SBA loans allow you to get your hands on some great opportunities where conventional lending institutions might not let you do so. It is a unique and great opportunity for small businesses to be able to secure their financing, or for getting lower mortgage fees, lower down payment, and an overall guaranteed access to capital to purchase equipment or real estate or just for using it as a line of credit for financing your different business projects.

We know finding the right financing options for your business is not an easy task, therefore Ameriquest is here to help find a tailored option for their specific business' needs. We are a partner you can count on to help you achieve any project you dream of. Our mission is to provide small businesses with a wide range of financing products that allow them to raise funds more efficiently to complete their projects. We look forward to participating in the creation of a sustainable future for your business.

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