Here’s how to grow your small business using SBA loans.
For small business owners, access to capital can make the difference between growing and struggling. Fortunately, SBA loans offer funding on reasonable terms that are designed to help your company reach its greatest potential. Backed by the U.S. Small Business Administration, SBA loans provided by Fifth Third are created with small businesses in mind.
Loan amounts can range from $500 to $5.5 million. You can use them for most business needs, from purchasing commercial real estate to financing equipment or supplementing your operating capital. Even better—the interest rates and fees are competitive with non-SBA loans, and many offer additional benefits such as lower down payments and flexible repayment options.
Here are five ways that SBA loans can help fuel your small business growth:
1. Update Your Equipment
Often the key to unlocking significant business growth is modernizing outdated equipment. For instance, a small manufacturer may invest in machinery that reduces a task from taking hours to minutes. Or a nursery may need a bigger truck that allows workers to deliver twice as many plants in a trip—saving on fuel and opening the opportunity for bigger orders. In these times of labor shortages, automated equipment can perform tasks previously performed by staff. Equipment purchases are an expected part of starting and growing a business. In fact, 27% of small business owners anticipate they will make capital outlays in the next few months, according to the National Federation of Independent Business. An SBA loan puts such purchases within reach, enabling your business to benefit from all the efficiencies that new equipment provides.
2. Improve or Expand Your Location(s)
The old adage of "location, location, location" still rings true for many small businesses. While finding the right location can certainly drive significant business growth, few small business owners can fully fund a real estate purchase or lease directly from their working capital or cash reserve. This is where an SBA loan can make the difference. The loans offer fixed or variable interest rates, and terms can extend for up to 25 years. Some even provide down payment options as low as 0% for owner-occupied commercial real estate. By leveraging SBA small business loans, you can capitalize on real estate opportunities and help your business reap the benefits of a truly great location.
3. Hire Additional Staff
Small business financing is not just for equipment and real estate. Small business owners often tap into SBA loans to increase their operating capital so that they can hire more people. However, finding and hiring employees in a competitive job market remains a challenge. Four out of 10 small business owners said they were concerned about filling open positions. With an SBA loan, you can ensure you have the financial ability to hire and make an offer when the right candidate becomes available. In addition, your business will have the means to provide competitive wages that attract quality applicants.
4. Take Advantage of Opportunities
Every successful small business owner has an anecdote about a product order or key customer that changed the trajectory of their company. But maximizing those opportunities requires quick access to capital. For example, you may need to buy supplies to fulfill the first big order of your product before you get paid for it. Or you may need to hire a contract workforce to fill in gaps in your services. With an SBA loan or line of credit, you can prepare your company for expected and unexpected opportunities. The ability to consistently meet those moments—and succeed—is how you go from a small business to something even larger.
5. Manage Seasonal Demand
Many small businesses face seasonal changes in demand for their product or services. An e-commerce company may get a crush of orders during the holidays but face a lull come January. Meanwhile, a florist may make most of their revenue with summer weddings and see a drop in traffic when the cold weather hits. Business lending—and SBA lines of credit—can help smooth out cash flow issues and help you avoid a sudden cash crunch when demand drops. On the flip side, you can also draw on the funds to fuel growth when demand arises.
Starting a small business is no small feat, and access to capital is what helps keep your dream alive—and growing. Talk to a Fifth Third banker about your small business financing options and whether an SBA loan can help your business grow.