As a Chinese restaurant owner, you’ve probably looked into loans and come across the word “SBA.” SBA stands for Small Business Administration, and it is a loan that you should investigate. Even though it’s referred to as a “loan,” it’s not one in the usual sense. An SBA is essentially a bank or alternative lender’s guarantee for a specific amount of money. The money from an SBA loan isn’t handed to you directly. This is done to protect the lenders in a disaster (such as a default).
According to PaydayNow, SBA loans allow alternative lenders and banks to take a riskier bet on new and small Chinese restaurant owners, allowing those who might not otherwise qualify for standard loans to get their businesses up and running. SBA Loans Come in a Variety of Forms:
Loan Program 7a
Revolving finances, equipment, working capital, and refinancing are available through this program. The 7a loan is the most popular type of business financing.
Loan Program CDC/504:
The CDC/504 program covers both real estate and the physical site of the Chinese restaurant.
It’s usually more beneficial to established eateries that want to expand.
The Benefits of a Small Business Administration Loan for Your Chinese Restaurant
- They’re great for small restaurants that can’t acquire bank loans because they don’t require collateral.
- There are fewer costs and more money than other loans. • Interest rates are lower, ranging from 6.75 percent to 8.5 percent.
- The repayment period can range from 10 to 25 years.
- SBA loans are flexible, and there are several different types of SBA loans.
The Negatives:
- The SBA application process necessitates a substantial amount of documents.
- Approval can take anywhere from 14 to 60 days.
- There are exact qualifications for SBA loans. • Not all SBA loans are unsecured (no collateral).
Benefits Of An SBA Loan For Your Chinese Restaurant: Qualifying With The Three Cs
A good lender looks at the Three Cs: credit, cash flow, and collateral to see if you’re qualified.
They’ll consider any credit score between 600 and 800, a minimum account balance of $1,000 to $5,000 for monthly cash flow (although they’ll also consider annual revenue), and collateral as a backup. However, you only need one of the three Cs to qualify for a loan, which means you can acquire an unsecured loan provided you meet the credit and cash flow requirements.
