Small business owners do not have the same borrowing needs as larger businesses, making it challenging to find the financing you need. The SBA’s microloan program is designed to help small businesses get funding tailored to their needs. Because the SBA works with lenders, you may qualify for an SBA loan even if you cannot get other credit types. Read more to learn about the three types of microloan options the SBA has for Small Business Loan New Jersey.
SBA microloans differ from standard SBA loans. The SBA lends money out to non-traditional lenders, which then loan up to $35,000 to small businesses. Terms vary according to the lender, but the loan period cannot exceed six years.
To qualify for an SBA microloan, you will need to have a solid business plan, profit-expense records, and the ability to repay the loan. You also need to select a local lender because microloans help businesses within the community.
While you do not need an excellent credit score to get an SBA microloan, you do need a good credit score. If any owners have 20% interest or more in the company, excellent personal credit can help you get the loan. If you have personal credit problems, getting to work fixing your credit score can help ensure you can get financing for your business when you need it.
Microloans help you with day-to-day business expenses. They can be used for most business expenses, but they cannot be used to purchase real estate or for debt consolidation. No worries, though; there are other SBA loans designed to help with those goals.
The SBA 7(a) program is designed to help businesses with small real estate purchases or debt refinancing. There are several different types of loans available under this program.
If you need more money, the SBA’s CDC/504 plan might be the right one for you. It is designed to help small businesses make significant purchases, such as real estate, equipment, or machinery. To qualify for this type of loan, you will need to cover 10% of the expected costs, a private lender can cover up to half of the cost, and a Certified Development Company (CDC) will cover the rest.
Worried you might not qualify for an SBA loan? An Emerald Credit Solutions professional can go over your credit and give you the tips you need to improve your chances of getting the financing you want.