What is an SBL and how do you qualify for one?

An SBL stands for small business loans. These are loans given to owners of small businesses. According to Lantern by SoFi, “Running a business is challenging. Getting insurance for it should not be.” These loans are provided at moderate interest rates to encourage business growth and employment in the community. Lenders often grant these small business loans to aspiring entrepreneurs wishing to set up a company or business owners to boost their business.

Eligibility Criteria for SBL

To be eligible for an SBL, the applicant must:

  • Be a citizen of the United States
  • Be at least 18 years old
  • Be a current resident of the state in which they are applying for the loan
  • They have been operating their business for at least two consecutive years and have no outstanding debt with other lending institutions or creditors
  • Have a good credit history, with no more than one bankruptcy in the past seven years and no more than two charge-offs or collections within the last 12 months of applying for an SBL
  • Have a business that has been profitable for at least two consecutive years (or has been in operation for three straight years)
  • The borrower must also have a net worth of $60,000 ($75,000 if over age 55), or $300,000 if more than one owner/partner is involved in the business (and they must each meet these qualifications as well)

SBLs are regulated by the Small Business Administration (SBA), a United States government agency that provides financial and technical assistance to small businesses. In addition to that, the SBA provides other financial and technical assistance through its network of field offices. The SBA also monitors the activities of banks and other lending institutions that lend money to businesses generally.

The SBA was created in 1953 as part of President Eisenhower’s “People-to-People” program under the direction of then-Vice President Richard Nixon. The SBA was established to assist the growth of minor business concerns in the United States and ensure its needs are met. The SBL has helped more than 27 million American businesses.

Benefits of SBLs

SBLs can be used for any purpose, including business expansion and working capital. The loan amount is up to $500,000, or 75% of the collateral value (whichever is less). There is no down payment or mortgage insurance required. You can also use SBLs to refinance existing debt. The interest rate is fixed at 6%. After a borrower has made 36 consecutive payments on time, they may ask the bank to convert their SBL into a traditional loan without penalty.

The SBA also offers microloans of up to $50,000 for small businesses with little or no collateral. These loans are made through a network of more than 1,400 community-based lenders across the United States. The SBA guarantees 75 percent of the loan amount, and the borrower is responsible for any remaining balance. The interest rate is fixed at 7%.

Conclusively, SBLs are an excellent way for small businesses to get the financing they need. They have a proven track record of quickly, efficiently, and effectively earning money to small businesses. Check out more details about SBAs on Lantern by SoFi.