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Funding for New Businesses: Why an SBA Loan Is a Great Option

March 5th, 2024 | 6 min. read

By Bryan Cremeen

When you start a new business, you can find yourself going through your funding faster than you expected due to a lack of financial insight. It’s hard to guess what the future holds!

You never want to use debt to operate your business, such as taking out a predatory loan just to run your payroll. However, if you’re looking for more funding to grow your business, SBA loans can be exactly what you need! 

CSI Accounting & Payroll has worked with small business finances for over 50 years. Since then, we’ve talked to lots of owners of new businesses who want to know:

  • What do I need to know about SBA loans?
  • Why are SBA loans specifically great for new businesses?
  • How can my accountant help me get an SBA loan?

Blog - Funding for New Businesses Why an SBA Loan Is a Great Option

About SBA Loans

We recently posted an article about long-term and short-term lending options and emphasized that long-term are almost always more favorable. 

They also require documentation that makes it difficult to get a loan you can’t afford, and they show your intent to acquire assets, which we love! (However, the government will require your home as collateral if you have more than 25% equity in it.)

SBA loans fall into that long-term loan category since they can be up to 10 or 20 years, depending on your specific loan. (The SBA offers a variety of lending options, but 7 (a) is the most popular option.)

While the SBA has different offices to support minority-owned small businesses, they’re mostly for matching specific groups to specific advisors with the best knowledge to help them. There are no specific loans for each of these groups.

SBA loans come from your bank, but they’re backed by the SBA. Banks like this peace of mind, so they may offer better repayment terms and even have easier entry requirements.

We think these loans are best for purchasing a business or making major expansions. Next, let’s tackle how that specifically applies to new businesses.

Why SBA Loans Are Great for New Businesses

Since we already mentioned that SBA loans are great for purchasing a business, now we need to talk about how this is easily applied to new (and new-ish) small businesses in a couple of different ways. 

New businesses may want an SBA loan to buy real estate and start from scratch or buy an existing business from someone else.

If you have a short history of working out of your home and want an SBA loan to help you expand into an office building, the SBA is happy to help! They love seeing your commitment to the growth of your business.

The only thing that the SBA (and banks) might love even more is when small business owners have some risk in the business, such as buying into a franchise. More risk from owners shows seriousness and puts lenders at ease.

How Accountants Help Secure SBA Loans

SBA loans are already on the easier side of long-term loans to obtain. However, if you partner with an accountant, they can make it even easier for you to get a loan!

Accountants can help with loan planning, preparing and gathering financial data, and creating an ideal presentation to use while applying for a loan. They’ll help you determine: 

  • Whether you need a loan or just better financial planning
  • How much funding you might need
  • How much funding you might be eligible for
  • How to reflect your profitability to a lender
  • Whether your books are in good condition or need to be corrected
  • How to best present your financial information to the lender

If you’re trying to obtain a loan that has different requirements, your accountant may also be able to assist with those, too. 

Getting your books in great shape is the most important thing they can do for you, though! This is achieved with a year-round partner, such as a monthly accountant.

It’s also beneficial to work with an accountant who already has great connections. If your accountant is in good standing with a bank or other lender, their recommendation of you can mean a lot! 

For example, CSI Accounting & Payroll has great lending partners that we can recommend, and we have lots of experience with obtaining SBA loans. We’ll also make sure you’re always ready to make informed business decisions by having accurate, current books and monthly financial statements!

Obtain Your Next Loan With Ease!

Now that you know more details about SBA loans, why they’re great for new businesses, and how an accountant can make the process even easier, are you ready to check out monthly accounting services?

If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:

Not ready to talk? That’s okay! First, learn more about whether your new business is ready to work with a monthly accountant yet, or whether you may be better suited for another solution for now. We want to make sure we work with you when we can provide the most value for you!

Bryan Cremeen

Bryan joined CSI Accounting in 2019. He joined the team after CSI purchased his accounting firm, AccountSource LLC, which he had owned since 2005. He graduated from St. Cloud State in 2001 with a Bachelor's Degree in Accounting and has been an Enrolled Agent since 2010. Before owning his own accounting practice, Bryan had worked at the State of MN handling financial reporting and had been in private industry as a Controller. His primary responsibilities include overseeing the accounting department and making sure clients are receiving quality service. Fun Fact: Bryan has played soccer since the age of 4. He still plays soccer year round through various adult leagues and is an avid supporter of the Minnesota United MLS soccer team. COYL!!! (Come on, you Loons!!!)