An SBA loan is a small business loan that is partially guaranteed by the government (the Small Business Administration), which eliminates some of the risk for the financial institution who is issuing the loan.
Of all types of small business funding, Small Business Administration 7(a) loans are one of the best ways to finance your enterprise. They’re guaranteed by the federal agency, which allows lenders to offer them with flexible terms and low interest rates. Getting one can help you grow your business without taking on possibly crippling debt.
SBA loans, as the 7(a) loans are also known, are the agency’s most popular type of financing. There’s one big downside, however: It can be tough to get a loan from the SBA.
Still, low annual percentage rates make the SBA program one of the smartest ways to fund your company. With some know-how and preparation, you may be able to secure some of the lowest business financing available. And if you don’t qualify for an SBA loan, there are faster, more accessible ways to borrow money, including online small-business loans.