Get Monthly Update - July 2009 - SBA - Sba

Advantages of SBA Loans While SBA lenders often require good credit, SBA loans can be easier to qualify for than some traditional bank loans. The Small Business Administration guarantees the loans, which helps to reduce the risk to lenders. Long repayment terms. SBA loans can offer long repayment periods.

The 7(a) Loan Program, SBA's primary business loan program, provides loan guaranties to lenders that allow them to provide financial help for small businesses with special requirements. 7(a) loans can be used for: Acquiring, refinancing, or improving real estate and buildings. Short- and long-term working capital.

While there are specific cases where you may not have to pay back an SBA loan, in nearly all cases, you do have to pay back the loan, just as with any other traditional small business loan.

A Small Business Administration (SBA) loan is supported by the U.S. Small Business Administration, which allows financial institutions to provide business loans with more favorable terms or more flexible underwriting criteria than conventional loans.

Because they're backed by the U.S. government, they're less risky for banks than issuing their own loans. But SBA loans are usually harder to get than online business loans, which may require less time in business and lend to borrowers with lower credit scores.

So, for prepayment-eligible SBA 7(a) loans, prepayment penalties include: Year 1: 5% of the total prepayment amount. Year 2: 3% of the total prepayment amount. Year 3: 1% of the total prepayment amount.