Top benefits of SBA loans for small businesses
Small businesses aren’t destined to succeed. In fact, most fail. And do you know what one of the primary reasons for a failure in business is? A lack of proper capital financing. Many businesses simply do not have enough money not just to start but to succeed. You’ve heard the saying, “You’ve got to spend money to make money.” The key to success for Salt Lake City businesses looking for SBA loans? Make more than you spend! You must still continually invest in your business.
How much would a Salt Lake City-based Small Business Need to Succeed?
Startup capital is necessary for any business. Certainly, some grow from the ground up and grow organically, but many need to spend money to make money. The important thing to consider for companies who need business lending in Utah is that a little initial investment will be required. How much investment is based on the type of business you intend to build. An e-commerce dropshipping company working on the Silicon Slopes might need a few thousand dollars. But if you want to start a brick-and-mortar deli, you may need tens of thousands, or even hundreds of thousands of dollars or more.
This is where loans from the Small Business Administration come in. The U.S. Small Business Administration (SBA) is a United States government agency that provides support to entrepreneurs and small businesses. Created as a government agency in 1953, the mission of the SBA is to provide assistance to small businesses and assist in helping them recover after a disaster. A recent example of this is their EIDL disaster loan program, which is now inactive.
Still, businesses can benefit from SBA loan assistance through other loan programs they offer. SBA loans offer specific benefits over traditional loans for Utah business owners large and small. Let’s take a closer look at how.
The Many Benefits of SBA Loans in Utah County
Small businesses that go to banks and other financial institutions for funding many times find themselves under the umbrella of high-interest rates, unfavorable terms, and other undesirable factors. Here are some direct benefits of financing through the SBA.
1. Save as much as $7,875.00 Based on a 350k SBA Loan*.
2. Cheaper than a conventional loan for Loans 250k to 350k*.
3. Can be used for Debt Refinance, Equipment Purchases, Start-Up Loans, Revolving Lines of Credit, Export Financing, Purchase of Commercial Real Estate, Partner Buy Outs etc.
4. Extended Terms: Usually, at First Utah Bank, we offer longer repayment terms, lower payments, and no prepayment penalties (except on commercial real estate). Fully amortized/no balloons. And there are no pre-payment penalties for loan terms under 15 years.
5. Competitive Rates
6. SBA Preferred Lender: First Utah Bank is part of the SBA Preferred Lender Program (PLP), an accreditation that allows us to serve our customers more efficiently. As a borrower, this is what our PLP status means for you: First Utah Bank has the authority to make final credit decisions without going through the SBA first. We’re typically three to four weeks faster at getting an answer to you than non-PLP lenders.
7. Up to 90% bank financing (OAC)
What are the SBA Loan Types and Terms?
SBA loans are small-business loans partially guaranteed by the U.S. Small Business Administration and issued by participating lenders, usually banks. The SBA acts as the funding party. For example, during the COVID-19 crisis, the U.S. government funneled billions of dollars into COVID relief funds. These funds were then opened up in the form of disaster loans and grants to small businesses across the country. In normal times, the government provides money to the SBA to provide other types of loans to businesses in need.
While the standards were loosened for COVID-19, normal SBA loans have more stringent rules. But for those who qualify, their flexible terms and low-interest rates can make them one of the best ways to finance a business. SBA loans benefit from federal rules that require participating lenders to base loan interest rates on prime plus a markup, which is usually quite low.
SBA loans provide small businesses with a way to fund their operations with an upfront guarantee fee, based on the loan amount and the maturity of the loan, and a yearly service fee — based on the guaranteed portion of the outstanding balance. This allows small businesses to be flexible within the loan agreement.
Finally, SBA loans typically allow companies more time to repay. When you don’t have to repay right away, you have more money to put towards business operations. In the end, the loan term will depend on how you plan to use the money you borrow. For example, if you need working capital or an inventory loan, the terms are 10 years, 10 years for equipment, and 25 years for commercial real estate.
SBA loans are perfect for those looking for small business loans in Salt Lake City, Utah! And here at First Utah Bank, we’re a leader in small business lending. Stop into one of our branches today and let’s talk about how we can help your business!
* Actual savings may vary based on applicant credit qualification and other qualifying factors.