Myths and Facts About SBA Loans

It seems as if the term “loan” tends to scare everyone these days, especially small business owners.

Thankfully, the Small Business Administration has made it simpler than ever before for alternative lenders and banks around the country to lend to small businesses. Lenders are eager to lend to small businesses and are offering more and more programs and resources to help small business owners start, manage, and grow their businesses!

Last year alone over $50 million was lent to small and medium-sized businesses per day in the United States. So this misconception of small business loans has to do to with a few key common myths.

* SBA funding is not affiliated with the U.S. Small Business Administration. We are a packager that helps expedite and process SBA loans.

Myth

Getting an SBA loan will take a year and will require a ton of paperwork.

Truth

At SBA Funding, our loan process, on average, takes anywhere between 6-9 weeks. Depending on the size of the loan and the complexity of your deal. Some loans may take upwards of 20 weeks to close.

Myth

If I can get an SBA loan directly from the bank, why use a third party?

Truth

Most banks can process an SBA loans, but there’s no guarantee you’ll get approved and your loan funded, wasting time, money and forcing you to start the process again if you get denied. Each time you switch bank, your credit gets pulled affecting your credit score. 

SBA Funding specializes in processing and funding SBA loans. We have a network of 50 banks where we shop your deal around getting you the best loan possible. Your credit is not pulled repeatedly and we guide you through the entire process.

Myth

SBA loans have high interest rates and fees.

Truth

Our interest rates are 2.25% and 2.75% over prime for real estate and working capital respectively. Prime is currently set at 5%.

Myth

My business is doing well, and we are on the road towards success. I don’t need a small business loan.

Truth

This is precisely the best time to apply for an SBA loan when business is on the upswing. Smart, inexpensive capital is the best way to take your business to the next level.

Myth

If you ask for more money, you are less likely to get approved for a small business loan.

Truth

This statement is completely false. Whether a first-time applicant for an SBA loan or you’ve had many SBA loans in the past, if your business meets the profit threshold to support debt service, after taking a livable wage, you can qualify for more money.