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How to get an SBA loan

An entrepreneur in Pennsylvania who is considering financing options for their small business may want to consider getting an SBA loan. These loans, which are backed by the United States Small Business Administration, have competitive rates and come with a wide selection of options. However, it's important that a small business owner who applies for an SBA loan is aware of how the loans work and prepared to take the right steps to apply.

Despite popular belief, the SBA does not directly loan money to small businesses. Small businesses are able to obtain SBA loans through approved lenders. The role of the SBA is to create guidelines and guarantee the loans, making it less difficult for entrepreneurs to be approved and lowering the risk for lenders.

To get an SBA loan, the business in question has to be a for-profit enterprise that conducts business in the United States or its territories. The business owner must also have invested equity in the business.

The amount of SBA loans can range from $500 to $5.5 million. The funds can be used for almost all business purposes, including as working capital or for purchasing equipment and real estate.

Loans guaranteed by the SBA generally have competitive rates and fees. Some SBA loans also provide other benefits, including education, no collateral, counseling and flexible overhead requirements.

An attorney who practices banking and finance law may assist a small business owner with obtaining financing, such as loans backed by the SBA, for business development purposes. Legal counsel could also create a legal entity, such as a corporation or limited liability company, under which a business may operate. Additional services include protecting the interests and rights of the client during negotiations.

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