Loans from the Small Business Administration can be a fantastic way to get the money you need to buy or expand a small business or obtain working capital. SBA loans typically range from $150,000 to $5 million and come with friendly terms that help small business owners get access to financing they wouldn’t otherwise qualify for.

Unfortunately, there’s a lot of misinformation surrounding SBA loan programs. Here are five common myths and the facts that set the record straight:

1. Myth: SBA loans are only available to very small businesses.

   Fact: The business must not exceed the small business size standard for its industry as defined by the SBA Size Standards. Maximum revenues can range from $2.5 million for some farming industries to $47 million for clothing retailers. Other industries are qualified by the number of employees. For example, some wholesaler industries can have up to 100 employees, and some types of manufacturers may have up to 1,500 employees. If the business happens to exceed those ranges, then they may even qualify through the Alternative Size Standard based on tangible net worth and average net income.

2. Myth: SBA loans are expensive.

   Fact: SBA loans are designed to be borrower-friendly. To keep the financing affordable, the SBA sets maximum interest rates on loans provided through the program. While there is a guarantee fee that varies with the loan amount, it can be rolled into the closing costs and funded as part of the loan. Other closing costs such as appraisals, title searches, attorney fees, etc. are the same as a comparable conventional loan and can also be funded via the loan.

3. Myth: SBA loans are difficult to do and can take forever.

   Fact: An SBA loan is no more difficult to do and should take no longer to close than a conventional loan, assuming the client is responsive to the bank’s needs.

4. Myth: SBA loans are for people with low credit scores.

   Fact: SBA loans are for business owners who are seeking a lower down payment and longer repayment terms as compared to conventional lending or who are starting or acquiring a business, refinancing debt to better terms, etc. A reasonable credit score is a requirement.

5. SBA does not allow partial ownership changes.

   Fact: An SBA loan can enable a buyer to acquire a portion of a business while the existing owner(s) maintains some level of ownership and involvement.

Keep in mind that Cadence Bank is a Preferred SBA Lender, which enables us to speed up the loan decision process. Our dedicated team of SBA loan experts is committed to helping you reach your goals. When you’re ready to talk to one of our SBA loan experts, please contact us.

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.