Small business loans can provide huge benefits for your company. They offer large funding amounts with incredible interest rates and repayment terms of 15–25 years. These are terms that other businesses dream of qualifying for. It’s hard to overemphasize how valuable this type of loan can be for your business. It can save you a lot of money and help you purchase items such as real estate or heavy equipment that make a real difference in generating profits.

How Easy Is It To Get Small Business Loans?

The application process for SBA loans is a little strange. On one hand, they’re purposely made for small business owners, so they have lower credit score requirements and cash flow requirements than traditional loans.

The reason for this assistance is that SBA financing is backed by the Small Business Administration, which helps lower funding costs. Small businesses make up the majority of the U.S. economy’s production and profits, so there’s a real incentive to help them stay healthy.

On the other hand, lenders don’t want to approve SBA loans indiscriminately. They have some requirements that can be tricky to meet, such as collateral requirements. You may need to have equity equal to about 20% of the loan’s total value, at least for some purchases. You also need to show that you have sufficient cash flow to cover the cost of the monthly payments and still run your business smoothly.

What Can Help You Qualify for Small Business Loans?

The good news is that the SBA has lowered some of the requirements for approval, so it’s easier than ever to qualify for a small business loan. Another positive thing is that lenders usually handle approval on a case-by-case basis, which means they may approve businesses that have healthy finances even if the balance sheet isn’t perfect.

One of the most important factors that lenders look for doesn’t have to do with financial records at all: your business experience. Many banks treat small business loans like any other investment. If the investment pitch wins them over, they’re happy to back the project.

The more experience you have managing a business and the more you understand about your company’s finances, the more persuasive your application can be. That way, even if your credit score isn’t as high as you like, you can explain the reason why and show how it’s going to improve in the future.