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Should you get a small business loan as an electrician?

should you get a small business loan as an electrician?

If you’re an electrician looking into getting a small business loan, keep an eye out for the acronym, SBA. SBA stands for small business administration. And while SBAs are called loans, it’s important to know they aren’t really “loans” in the traditional sense.

With an SBA, you won’t have the loan given to you directly. Rather, the SBA is a guarantee to the banks, lenders, or other financial institutions for the money being lent to small businesses. So let’s say you default on your loan, the guarantee protects the lenders since they’ll be the first ones to get paid back.

An SBA loan allows for approved lenders, banks, and any other financial institutions take risks on small business owners; giving people who may not typically qualify for traditional bank loans to get their businesses going.

Before we talk about the good and the bad of SBAs, it’s important to know there are two different types.

The 7a loan program is for equipment, revolving funds, refinancing on previous debt, and working capital. The 7a is the most commonly used loan and can be a good way to start your business.

The second one is known as a CDC/504 loan (certified development company) is for physical business location and real estate, but also helps already established businesses expand.

should you get a small business loan as an electrician? Here are the pros and cons of SBAs.

The good (pros)

  • SBAs are a great way to start your business if you don’t qualify for traditional bank loans.
  • SBAs are unsecured since they protect the lender.
  • You’re likely able to pay a smaller fee upfront to get a larger loan for a longer period of time than you would through more traditional options.
  • The interest rates are actually fairly reasonable for small businesses (6% – 8%)
  • they have incredibly long periods for repayment (10 – 25 years)
  • They can help a wide range of small businesses, including electricians like you.
  • There’s more than one program and you can get one that fits what you need.
  • SBAs are unsecured since they protect the lender.

The bad (cons)

  • There’s a ton of documentation and paperwork needed when going through the application process.
  • Approval can take anywhere between two weeks to two months and can overall be a pretty long ordeal.
  • While they are available as unsecured, some places or agreements may require some collateral from you.
  • Tight guidlines for what types of businesses qualify for SBAs.

Finance Factory helps electricians get small business loans

Finance Factory has a team of highly trained professionals who guide and educate clients so they can make the best and most informed decisions possible when looking at loans. They help you every step of the way and give you all of the information for your application. Their specialty is making and building relationships between small business owners and vetted lenders while offering great rates and affordable terms for everyone.

Interested in finding funding for your business? Finance Factory would love to help! If you’re looking to fund your business within the next 30 to 90 days for $25,000 to $500,00 and have a credit score of 650 or better, 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 get started!

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