Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Aug 3, 2012

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If you’re hoping to start up a business or expand a current business, chances are you’re going to need some capital to do so. Many business owners obtain that capital by financing a traditional business loan through a bank. But before agreeing to a typical business loan, owners and entrepreneurs should be aware that the government offers a special type of business financing through what are called SBA loans.

SBA loans are a product issued by the U.S. Small Business Administration (SBA), and they’re usually offered at better rates and with better conditions than what traditional lenders offer common business loans for.

While the SBA offers disaster, special purpose, and veteran and military loans, most business owners and entrepreneurs would be interested in the typical SBA financing opportunities offered through the Basic 7(a) Loan Program.

SBA loans from the 7(a) Loan Program typically come with terms of more than 20 years. While the maximum term is 25 years, this extended period of time allows those with business-oriented dreams to use borrowed money for the amount of time necessary to achieve those dreams.

Additionally, SBA loans can be taken out for a maximum of $2 million. That kind of capital allows even the most aggressive of endeavors to receive the funding necessary for a successful launch.

Finally, because the SBA guarantees their loans, lenders are more apt to offer SBA loans at lower interest rates.

In order to qualify for an SBA loan, interested entrepreneurs should refer to the SBA’s application checklist which includes the following steps required for a successful application:

  • Fill out an official SBA Loan Application
  • Complete a Personal Background and Financial statement
  • Prepare business financial statements
  • Provide ownership and affiliation details
  • Attach an original business license or certificate to the application
  • Include previous loan application history
  • Include income tax returns
  • Prepare resumes for each principal applying for a loan
  • Include a copy of the business lease