Business Financing: SBA vs. Conventional Loans
Fueling growth requires capital. Choosing the right loan type can determine whether that capital acts as rocket fuel or an anchor.
SBA Loans (7a & 504)
The Small Business Administration (SBA) partially guarantees these loans, reducing
risk for lenders.
Pros: Low down payments (10%), long terms (10-25 years), and capped interest rates.
Cons: Slow approval process (60-90 days), extensive paperwork, personal guarantee
required.
Conventional Bank Loans
Direct lending from a bank without government backing.
Pros: Fast decisions, fewer restrictions on how funds are used.
Cons: Higher credit score needed (700+), larger down payments (20-30%), shorter
terms.
Before You Apply
- Business Plan: Lenders need to see exactly how the money will generate revenue.
- Cash Flow Statements: Can your current revenue support the new loan payment?
- Collateral: What assets (inventory, equipment, real estate) can you pledge?