As an owner of a Chinese restaurant, it’s likely you’ve researched loans already and have seen the term, “SBA.” Simply speaking, SBA is an acronym for the Small Business Administration and it’s a loan you should look into. However, even though it’s a “loan,” it’s not a loan in the traditional sense.
An SBA is basically a guarantee from either banks or alternative lenders for a certain amount of money. When it comes to an SBA, the money isn’t given to you directly. This is done to protect the lenders if anything unfortunate were to happen (such as a default).
SBA loans allow alternative lenders and banks to make riskier investments on new and small Chinese restaurant owners– so, anyone who may not qualify for traditional loans has the opportunity to get their Chinese restaurants up and running.
Types Of SBA Loans: Advantages of An SBA Loan For Your Chinese Restaurant
7a Loan Program: This program provides revolving funds, equipment, working capital, and refinancing. The 7a loan is the most common for funding businesses.
CDC/504 Loan Program: The CDC/504 program funds real estate as well as the physical Chinese restaurant’s location. It’s usually more useful for established restaurants who are looking to grow.
Pros And Cons: Advantages Of An SBA Loan For Your Chinese Restaurant
The Pros: Advantages Of An SBA Loan For Your Chinese Restaurant
- They’re awesome for smaller restaurants that can’t get bank loans.
- There’s no collateral.
- Smaller fees and more money than other loans.
- Lower interest rates at 6.75% – 8.5%.
- Payback terms can be 10 – 25 years.
- SBAs are flexible.
- There’s more than one type of SBA loan.
The Cons: Advantages Of An SBA Loan For Your Chinese Restaurant
- Large amount of documentation required during the SBA application process.
- Approval can take fourteen to sixty days.
- Not all SBA loans are offered as unsecured (no collateral)
- Very specific qualifications for SBA loans.
Qualifying With The Three Cs: Advantages Of An SBA Loan For Your Chinese Restaurant
To determine whether you’re qualified, Finance Factory looks at the Three Cs: Credit, Cash flow, and Collateral. They’ll look at any credit between 600 – 800, a minimum account balance of $1,000 – $5,000 for monthly cash flow (but also look at annual revenue), and will accept collateral as an option. However, You only need one of the three Cs to qualify for a loan – meaning as long as you fit the credit and cash flow qualifications, you will be able to get an unsecured loan.
Finance Factory Helps You Experience The Advantages Of An SBA Loan For Your Chinese Restaurant
Are you interested in an SBA loan for your Chinese restaurant? Finance Factory would love to help! If you’re looking to fund your business and have a credit score between 600 – 800, let’s chat! Get pre-qualified right now with our quick-step pre-qualification form! And don’t worry, this will not result in a hard credit inquiry of sensitive information. We just want to learn more about you and your business. Click below to start!