The Advantages and Disadvantages of SBA Microloans
SBA Microloans offer a great source of funding to business owners who may have tried every other way to acquire it and failed. People looking for comparatively small amounts as loan can sometimes find it difficult obtaining traditional financing. The average loans of most other types of loans are quite high. For instance, the average amount of the SBA 7(a) loan is $368,737. Therefore, it is one of the best small business loans you can get. Note that there are both advantages and disadvantages to such loans, including the following.
- Established companies and startups are eligible
- This is ideal for underserved entrepreneurs like minorities, veterans, disabled, and women.
- Comparatively low rates of interest and long repayment periods.
- The go-to option for freelancers and businesses with few or no employees.
- Good choice for those with no credit history.
- Only limited uses are allowed—for instance, the money cannot be used for purchasing real estate or debt refinancing.
- Insufficient if you need more money than $50,000.
- You need to have good business plans to qualify.
- The loan sanctioning process could take a few weeks.
- It might require a co-signer if you have bad credit records, or need to produce collateral.