For small business financing, an SBA loan offers many benefits. Here, franchise experts, All State Franchise Finders share a little about SBA loans.

SBA Overview

Small Business Administration (SBA) loans are one of the best ways for small businesses to gain funding. While the SBA doesn’t lend the finance directly themselves, they do guarantee the loan, meaning they are able to negotiate more flexible terms, better rates and different criteria with a wide range of lenders. With some of the lowest interest rates available, SBA loans are one of the smartest and most popular ways to finance a new business.

Backed by the Federal Government, the SBA reduces the risk for lenders lending to small businesses that have low cashflow, little or no credit history and no proven track record. The reduced risk for lenders means easier access to capital for small businesses.

Business owners can get up to 85 percent of loans up to the value of $150,000 guaranteed or up to 75 percent of loans more than $150,000 guaranteed. The maximum lending through an SBA loan is $5.5 million.

SBA Process for Small Businesses

To receive an SBA loan, there is some criteria a business must meet in order to be eligible and the application process is quite lengthy and in-depth. For this reason, many business owners turn to franchise experts for advice and guidance throughout the process. Derek Cafferata, CEO and President of franchise experts All State Franchise Finders has worked with a large number of franchisees looking to secure an SBA loan.

“SBA loans are one of the best options for a franchisee looking for financing,” says Derek Cafferata. “But the application process isn’t an easy one. You need to be confident you meet all criteria before starting the lengthy process.”

According to Derek Cafferata, the basic requirements include three years previous personal and business financial tax returns, a business license or certificate, a business lease, a personal financial statement and statement of personal history, a loan application history and an SBA borrower information form.

Here’s a quick outline of the process for a small business loan application through the SBA:

• Prepare a business plan
• Meet with a lender
• Complete a loan application form
• Loan application submitted by lender to SBA
• SBA determines eligibility of application
• Loan authorization agreement between SBA and lender is prepared
• Loan documents are prepared and signed

“SBA loan applications are far more in-depth than a few bullet points,” says Derek. “Which is why it is highly recommended to utilize the knowledge and experience of a franchise expert.”

Franchise Programs

The SBA offers a few different loan options to small businesses, including their most popular 7(a) Loan Program, their 504 Loan Program and their Microloan Program.

Those looking to open a new franchise would be suited to the 7(a) loan, while those who are looking to expand their business, like buying real estate or investing in machinery, would be better to consider the 504 loan.

All State Franchise Finders

Derek and his team at All State Franchise Finders is very experienced in helping guide people through the process of an SBA loan. For more information, please feel free to contact All State Franchise Finders on 1-800-544-2161 or visit allstateff.com today. All State Franchise Finders – Your Franchise Experts!