Finding business loans can be tough when your company is new or when it’s a small operation. That’s because most banks require a lot of reserve cash and collateral, as well as at least two years of consistent profitable operation before they green light a long-term loan for property or equipment. Working capital loans can be even harder to get than asset loans, too, because they are not secured to a specific purchase. As a result, you need to own the assets that you plan to use as collateral already. Luckily, there are long-term loans for acquiring a business, buying a building for it, and obtaining equipment that are designed for small companies. They’re available as SBA loans through the Small Business Administration.

How Big Is a Small Business?

The SBA generally works with companies whose income is below $1 million per year. The amount is periodically adjusted upward for some programs. The exception is the disaster loan program, which has some loans open to any businesses or individuals. Otherwise, this limitation allows the administration to make sure its budget is being used to help small companies owned by people like you who are trying to build up the local economies where they live.

How Do SBA Loans Work?

The Small Business Administration doesn’t actually make any loans itself when you apply for a loan through the 7a or 504 programs for small business. Instead, it guarantees all or part of the loan so that the lending institutions in your community can afford to take the risk of offering the loan at an affordable interest rate. As a result, the SBA also dictates some restrictions be placed on the loan, typically including prepayment restrictions as well as property use restrictions. For example, businesses buying buildings must use at least 51% of the floor space for their own facilities.

How To Apply

If you are interested in using SBA loans to get the equipment or facilities your company needs to keep growing, there are two ways to apply. Traditional SBA lending partners will have an application package that they approve and then send on to the SBA for approval. This can take a few weeks to a few months to complete, and you can only really apply through one partner at a time. Preferred partners can approve their own loans, though, allowing you to apply at many and accept the offer that comes through first. This often helps with faster closings, and it improves your odds of being approved by increasing your number of chances for approval.