Small Business LendingBanker Resource
June 5, 2013 — 1,089 views
Small business lending is a vital cog in the wheel of entrepreneurship and startup companies. Many individuals that start up a new business do not have ready cash to develop the business. As a result, approaching lending organizations, such as banks for a small business loan will help them go a long way into realizing their dream. However, understanding how SBA lending and small business lending works will go a long way into helping you reap the benefits.
Benefits of Small Business Lending
The most obvious benefit of small business lending is that the plans are all geared towards helping small businesses grow. Some of the other well-known benefits of small business lending includes easy availability and accessibility to prospective customers. SBA lending also allows for proprietors to take out multiple loans while also providing the opportunity, although hard to get, for lower interest rate loans. Another huge advantage of these loans is also the prospect of tax benefits. The laws state that small businesses taking loans from banks will enjoy some tax benefits because of the fact that a percentage of the profits are diverted to pay the loan.
The SBA offers a variety of small business lending loan types. They practically cover any kind of situation you can see your firm being affected by. Disaster Loans, for instance, will provide financial assistance to victims of natural disasters, economic disasters, and any loss as a result of physical disaster. Starting and expanding business types of loans are primarily geared to help those companies that are looking to start up or even grow in the market, while the Veteran and Military Community loans are helpful when it comes to assisting the patriots and veterans of the country. There are also special purpose SBA Lending Loans that are aimed at helping small businesses achieve their short-term goals.
Fundamentals of Documenting, Funding, and Closing SBA Loans
The paperwork, as with any kind of small business lending, is an important--although tedious--part of the process. There was a time when SBA lending was considered to be a last resort solely because of this taxing process. However, with the current dark clouds hanging over the economic horizon, more and more people are looking for stability within the financial institutions that they choose to borrow from. Given the fact that credit standards have tightened, proper filing of documentation is absolutely pivotal in ensuring that your loan application is well received.
Among these SBA lending documents, do not leave out important aspects such as personal background, your resume, business plans and proposals, credit reports for both - the business and the entrepreneur, Income tax returns as well as the bank statements. Declaring collateral is also essential as the lending institutions will feel more relaxed about the arrangement.
The SBA Lending ventures play a huge role in the funding of new companies and should be taken as a very serious option. The SBA loans will be closed when the debt has been repaid along with the agreed upon interest. Any original documents of ownership that were handed over as collateral will be returned to the borrower and documents of completion are also issued.
In conclusion, the help of the SBA Lending schemes is invaluable to new as well as growing companies and industries. In the days when there is a lot of tension regarding the economic future, it helps to have a government organization work with small business owners to help them realize their dreams.