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3 of the most popular small business loans and which type is right for your business
Over 32.5 million strong small businesses representing 99.9% of all US businesses. To support these small but powerful engines of the American economy, which together employ more than 45% of the nation's workforce, the Small Business Administration offers a variety of business loans to help them grow and succeed.
Of course, small business owners have plenty of financing options outside of the SBA. Whether it's personal loans, business credit cards, or a large bank line of credit, there is no shortage of cash storage options. But when it comes to some of the most competitive low interest loans for large loans, SBA loans are among the most sought after.
Created to encourage small business economic activity, the SBA is a government agency that gives grants to private financial institutions such as banks or credit unions. It acts as collateral for the loan from repayment to the total amount of the loan. This allows institutional lenders to provide better financing options to borrowers, as they are less likely to lose their investment in the event of a business failure.
In other words, by subsidizing the debt incurred by small businesses, a Standby Credit Agreement (SBA) lowers the barriers that often get in the way of bank loan approvals.
Today, a small business owner can apply for one of several SBA loan options depending on the situation and business needs. Most commercial organizations qualify for SBA financing.
To learn more about financing…
J Conrad Williams Jr./Newsday RM // Getty Images Show
Ruby compared the top three small business loan programs using data from the SBA, Congressional Research Service, and other industry sources.
