5 Questions to ask when deciding on an SBA Loan

by

25 June 2019

Finance

SBA Loan

Capital is to a business what oxygen is to a plant. Without it, the business cannot grow and will very likely starve and die. Businesses find their capital in a variety of ways. Some simply have wealthy owners or investors who are willing to take the risk and provide the business the funding it needs to get started up and to take on major projects. Others sell stocks or bonds in the hopes of raising enough cash. While this may be the ideal situation for most businesses, it is not what most end up doing. For most businesses, the standard way to raise money is to get a business loan from a bank.

The government knows this and has created a number of programs trying to help American small business succeed. For instance, the Small Business Administration, or SBA, has several different types of loans that are meant to privilege small businesses and help them grow. These are usually a great option for most small businesses. Is an SBA loan right for your business? Here are a few questions you should ask yourself.

1. Do I have all the information the bank will need?

Since SBA loans are secured by the government, they have a standardized set of required information that must be sent into the bank. A few highlights from this list are:

  • A well thought out business plan
  • A business license
  • A business credit report
  • Business tax returns
  • Resumes of key personnel
  • Personal tax returns
  • Personal financial statements from stakeholders with more than 20% of the business

As you can see, the requirements here are rather extensive. The SBA is trying to minimize the default risk on these loans that they are ensuring.

2. Is my business eligible?

SBA loans are meant to be accessible, but that doesn’t mean that everyone will be able to get one. The program does not rely on taxpayer money, so it takes steps to remain solvent. To be eligible, your business must be based and operate out of the United States. It must also work within an approved (though very large) list of industries. You must show that you are not able to get the same credit at reasonable terms through other means and also be below size requirements, typically meaning less than $15,000,000 in annual revenue.

3. Why am I seeking a loan?

This is a good question to ask whether it is a personal or business loan. When seeking business credit, you must make sure your motivation is correct. Too many business owners get stuck financing vanity projects or trying to keep up cash flows with borrowed money when they really need to fix the root problem. It is always a good idea to speak with an accountant or financial professional before taking on business debt. Not only can they advise you if it is the best course of action, but they can also help you structure the business and the debt itself in the best way for your company.

4. Should I get an SBA Express loan?

Knowing what kind of loan you need is just as important as knowing whether you need a loan or not. The SBA has six major categories of loans, so you will need to do your research before deciding which is right for you. For instance, there are options for businesses that need money quickly. The SBA Express loan program can get you approved for a loan in as little as 36 hours, much faster than the standard three months for most loans. If you need money now, it is there for you, but only if you are financing for the right reasons.

5. How will I pay it back?

Loans are a normal part of business, and many businesses would not be where they are today without the financial help they received early on. That said, having a repayment plan is just as critical as every other step of the process. The bank you take your SBA loan out with will be more than happy to help you plan out how to repay them. It is worth noting that SBA loans do have an extra fee attached, anywhere from below 1% to around 3.5%. This is to make sure the program can stay solvent going forward since it does not receive taxpayer money, as previously mentioned. This fee is amortized over the life of the loan and is simply added into the payments you already have to make, so it is not even an out of pocket expense you need to budget for.

This is certainly not an exhaustive list of questions. Anytime you are considering borrowing money, you need to do a tremendous amount of research and make sure that it is really the right decision for your business. Ultimately, you are the only one that will know whether or not this is the right course of action. Some business owners cite their gut feeling on this, others have methodologies for deciding. Regardless of your process speak to an expert about your financing options. Your business will thank you!

Read Also:

Content Rally wrapped around an online publication where you can publish your own intellectuals. It is a publishing platform designed to make great stories by content creators. This is your era, your place to be online. So come forward share your views, thoughts and ideas via Content Rally.

View all posts

Leave a Reply

Your email address will not be published. Required fields are marked *

Related

Crypto Trading Bots

Best Crypto Trading Bots of 2020: You are Unaware

If you want to know how to make money from Cryptocurrency then you must know what is cryptocurrency. The cryptocurrency market is much stronger than any stock market which is beneficial to the traders and the casual investors in the industry. Cryptocurrency trading provides the perfect opportunity for making money in the market. The innovations and market of cryptocurrency have steeped the zenith in the market and very soon will be taken over by the bots. So it becomes important for you to know how to choose a correct Crypto Trading Bots and which are the best crypto trading bots of 2020. Parameters of Choosing the Correct Crypto Trading Bot Choosing the correct crypto trading bot is the most important aspect. Since now bots will be taken over the cryptocurrency trading, hence one must wisely choose the correct bot. The first parameter which must be considered while choosing a crypto trading bot is the reliability of the bot. The second factor that must be checked in the bot is the security of the bot. The third factor must be the profitability of using a particular cryptocurrency bot. Transparency of the bot is another major factor that must be checked before finalizing any. Last but not the least, the bot must be easy to use. The user must be friendly with the usage of the bot. Top 3 Best Crypto Trading Bots There are many bots available that are associated with cryptocurrency trading but one must know which are the best Crypto trading bots. Choosing the correct bot is very important hence the top 3 best crypto trading bots have been introduced here. Cryptohopper Cryptohopper is relatively a newer bot in the crypto trading market. But this new bot has caught the attention of many users with the new technical features that it comes with. One of the major drawbacks of most of the trading bots is that they might only run on the local machine which means that they will run when your PC is turned on by you. This bot uses cloud technology to keep the bot running 24*7. 3Commas Another interesting crypto trading bot is 3Commas which has gained popularity in very little time as it provided a lot of users with a lot of gains. This bot has a unique feature that separates it from other bots that are this bot has the ability to trail any crypto market. This feature helps the bot to close the trade at the most profitable position. This bot also allows users to trade with multiple cryptocurrencies at the same time. Kryll.io Innovation is their weapon and they have utilized their capability to the ultimate level to make people realize that the best way to crypto is trading. They have redefined the definition of cryptocurrency. The core feature of this bot is you can create your own strategy here and not blindly follow any automated strategy. Conclusion Apart from all the advantages and benefits brought in by crypto trading bots, it also brings in some disadvantages. We can say that this is not very suited for new traders. It also requires constant monitoring, and not all the bots would be equally secured. Kow you may choose the correct bot for yourself. Read Also: Forex Trading Wisdom: Talk Yourself Out of Bad Trades Investing In Bitcoins: 5 Things You Need To Know

READ MOREDetails
Stocks Versus Real Estate

Stocks Versus Real Estate: Which Is The Better Investing Option?

For a long time, people are confused between various investment options that can help them get better returns. You may also have the same confusion in your mind: the best investment option that can help you achieve your goals. There are two primary kinds of investments; one is stock, and the other is real estate. A matter of fact is which is the better form of investment stocks or real estate, from where you can get better returns from your investments. The best thing that you can do from your end is to compare the two to understand the better possibilities of returns. Stocks Vs Real Estate From Where You Can Gain More- There are several forms of investments but selecting the best among them is the challenge. Stocks or Real Estate which one can prove to be better for you. Let’s explore the two investment options to get a better idea about them. 1. Creation Of Wealth: When you are investing your money in stocks, the chances of getting higher returns are there. The reason behind this fact is you are holding the share of a company. As the company grows, the return on your investment grows simultaneously. Now,  when you are investing your money in real estate, then chances are there that you can get a stable return from your investment but not higher returns. The process of wealth creation is slow compared to investments in stocks. 2. Paper Work & Stress: You have to do lots of paperwork if you want to purchase a real estate property. You have to handle midnight phone calls and have to use your references enough to sell or buy a property; the entire process is stressful and cumbersome. Whenever you wish to invest your money in stocks, you can do it easily through various stock trading apps, and you can contact a broker or a financial planner who can guide you to make your investments in the right way. Ensure that you give plans for the best stocks to buy. 3. Stability In Return: When you invest your money in stocks, you must be aware of the market risk and volatility.  The stock prices of the company can fall or rise as per their current profitability rate. You have to analyze the market well before you make your investments in the stocks. No such requirement of heavy market analysis is not there in the case of the investment in real estate. You just need to compare the prices of various real estate properties, and you can earn a stable return on your entire life without any stress or tension as the market volatility rate does not impact it. 4. Impact On Debt: If you have debt in the market and invest your money in the stocks, you are putting yourself in a high-risk zone where it is challenging to get over it. You have to plan things in the correct order to get better returns to pay off your debts. The market volatility rate of the stocks is high, so you may not get anything if the company suffers losses. In the case of real estate, you can enjoy a stable return from your investments. It can help you to get better returns to pay off the debts on time. Stable returns ensure better returns from your investments. 5.  Cash Flow:   Rent from real estate properties can help you get a steady return from your investments, and the cash flow of money remains smooth every month. You have to consider these facts while planning your investments. The returns from the market may become unstable if you face the loss from the company where you have invested your money as stocks. Keep these things in mind while you plan to make your investments. Key Take-Aways:   Hence, these are some of the crucial factors that you need to consider while trying to compare stocks and real estate. Remember that both can provide you the better returns from your investments, but the difference lies in the rate at which you get the returns from your investments. You have to think analytically while you are making your investment decisions. Read Also: Why Off-Plan Investment Is Beneficial For Expats Real Estate Syracuse NY Investment: Flipping Houses

READ MOREDetails
Silver Dollars

4 Mistakes to Avoid When Shopping for Silver Dollars for Sale

Any form of financial activity is susceptible to traps and common mistakes. As an investor in precious metals, you’d want to avoid such misfortune, considering the volatility that accompanies these currencies. With that said, you should understand the precariousness associated with silver dollars and still avoid pitfalls in your investment strategy. Below are four mistakes you should avoid when shopping for silver dollars for sale. Unrealistic Expectations One of the biggest mistakes investors make, albeit their experience level, is impatience and greed. Similarly, many newbies in metal investment think it is a done deal, and prices can only go up in the short term. Wrong! The recipe for success in metal investment lies in patience and knowing that it is a long-term endeavor. You can only quantify your success over the years, not months. So, if you think this is a get-rich scheme, you have unrealistic expectations, which are a deathbed for your downfall. Before you venture into the business, evaluate your investment goals, why you are looking to sell silver dollars, and whether there is market stability. In most cases, you might be considering silver dollars for sale due to some global economic conditions that hardly change. This means that you should be in the business for the long haul. Don’t jump ship because you haven’t seen results in two weeks or months. Also, remember the flip side. Chasing the Price Some investors put all their faith in one investment strategy, and when it fails, they drop it for another. In most cases, investors feel that they have the best strategy, and it is guaranteed to work. However, when it doesn’t work, they blame it and take on another. In this instance, you should note that the problem lies with the investor, not the strategy. You need to approach such with the level-headedness they deserve. You should take a step back and allow the tactic some more time. Remember, investing in silver dollars for sale is a long-term holding. You can’t measure its success accurately in weeks or months. Minimal Research When you encounter something new, you can simply take advice from friends or websites and take the leap. There is significant information you must learn about silver dollars, and that means you should sift through misinformation too. While there are sound blogs that offer relevant information about the investment, make sure to assert the veracity of any information you collect. Learn how to identify fake silver dollars from the original ones by consulting with experienced investors. This information can be found on company blogs or websites hosted by wholesalers and dealers. Also, keep up to date with the latest information from the US Mint. Assess the Market Silver dollars prices will fluctuate as this is the innate nature of the market. As an investor, you should keep tabs, weigh the value and ensure your product gets a fair price. Always check the market from time to time to know the best time to buy and vice versa. Use these tips to avoid the common mistakes when buying silver dollars for sale. Now that you know, you can confidently invest. Read Also: Is Investment Bankers/Brokers/Service A Good Career Path In 2021? Top 5 Investment Decisions You Need To Make In Your Thirties How Many Jobs Are Available In Real Estate Investment Trusts? 2021 Updated

READ MOREDetails