Are you ready to jump all in and start or expand your own business? One of the first steps in this process is applying for a small business loan. Here are three facts about applying for a loan to get your company where you want it to be. 

1. There are Different Types of SBA Loans Available

When you look at SBA loans as a financial option for your company, consider how you need to use that loan. If you are interested in growing your organization, look for a traditional small business loan. These options offer higher borrowing limits and may be structured to provide funds to purchase equipment or company vehicles. If you’re just starting up, banks offer start-up funds through credit cards or personal loans since the business isn’t profitable yet. For companies that are up and running and are just looking for help paying bills, the option for a business line of credit is available. This flexible product allows companies to pay off their debt or payroll when times are tight. 

2. Qualifying for a Loan Has Conditions

There are many requirements that you need to meet in order to qualify for SBA loans. One of the conditions is that your personal credit history and score must be within the top range for lower interest loans. Banks also want to ensure your company brings in enough profit to be able to pay the loan back. If your company’s income is low, banks may require collateral in the form of equipment or goods. If you do put up collateral, be aware that the bank can collect on those items or take the business if you default on the loan.

3. Multiple Lenders Offer SBA Loans

When searching for a lender, there are three places to look: banks, online lenders, and nonprofits. Here are some pros of each type. Online lenders make it quick and simple for people to apply for a loan. Electronic applications are available via computer and can be completed and submitted effortlessly. Interest rates are often much higher with these loans, but it’s a small price to pay for rapid turnaround and lower profit requirements. If you aren’t in a rush, your local bank has products with lower interest rates, but they may require a certain profit margin. Lastly, nonprofit microlenders may be able to step in if you don’t qualify for other loans. These loans provide smaller borrowing amounts and have much higher interest rates, so they are best saved for necessities.