2. SBA loans
Financing options from the U.S. Small Business Administration (SBA) include loans and lines of credit. SBA loans are popular because they're backed in full or in part by the federal government, making them less risky for lenders. This means small businesses that haven't been able to qualify for a traditional business loan can often be approved. It can also mean better terms, like low down payments, and sometimes no collateral required. Some SBA loan programs include helpful financial counseling and education programs. The SBA offers several financing products, including loans for expansion projects, working capital, exports, and international trade.
Microloans are also an option for new businesses without the financial history to qualify for a traditional loan. Because these loans are offered in lower amounts, the requirements to qualify are often lower too. The U.S. Small Business Administration offers microloans up to $50,000, but $13,000 is their average microloan amount.2 Many nonprofits offer microloans to small businesses from under served groups, such as minority- or woman-owned firms and those in low-income communities.
How to get an SBA loan: Many commercial lenders offer SBA loans. You can visit the SBA loan website to find a lending partner and research the best SBA loan type for you. In some cases, to qualify for an SBA loan, you must have tried, unsuccessfully, to borrow money from other sources. Talk with your lender for details.3
How to get a microloan: Microloan lenders vary widely in terms of qualifications, so start by finding the best microlender for your small business. If your business is minority- or woman-owned, search for a nonprofit lender that serves you. And be sure to check out the SBA's microloan program.2
3. Business lines of credit
A line of credit offers small businesses some of the benefits of a loan and credit card in one. Unlike a loan, a business line of credit can be used for anything, and some are unsecured too — meaning they don't require collateral. They also have a higher approval rate than business bank loans.4 They function similarly to a credit card in that you have a credit limit, and you only use as much money as you need at any given time. Interest rates for lines of credit are often lower than those credit cards offer. Like a credit card, though, you only pay interest on the money you actually borrow on the line of credit.
How to get a business line of credit: Commercial banks and online lenders offer lines of credit to small businesses. Shop around for the best terms. Many lenders offer online applications, but be prepared to supply financial statements, tax information, balance sheets, and other documentation when you apply.
Taking the next step
Interested in borrowing money for your small business? Synovus is an SBA Preferred Lender, and we're committed to helping small business owners achieve their goals. Stop by your local branch to talk with a banker about how Synovus can help you take your small business to the next level.