Why Choose an SBA Loan? Key Benefits Explained

Published on January 5, 2022 | Webster Bank
Last updated: June 4, 2025

As a small business owner, you’ve probably heard of the Small Business Administration (SBA). This is the federal government agency dedicated to helping start, build and grow small businesses in our communities. One of the ways they do this is to guarantee loans that banks make to small businesses. These are called SBA loans.

Key benefits of SBA loans

Banks are more likely to approve a loan that qualifies for an SBA guarantee – which is good news for small businesses. While you apply for an SBA loan at a commercial bank, like Webster, the loan is structured according to SBA guidelines. Compared to a conventional loan, SBA loans may offer:

• Lower down payments in many cases, freeing up more of your capital for other business purposes
• More time to repay – for lower monthly payments
• No balloon payments at the end of the term
• Loans up to $5 million, depending on your business’s specific needs
• Small loans, including microloans under $50,000
• Financing for closing costs in many cases
• Competitive interest rates that help you save monthly and over the life of the loan

When should you consider an SBA loan?

You should consider an SBA loan when you need business funding for startup costs, working capital, equipment or real estate purchases, inventory, supplies, acquisitions, debt refinancing, or other start-up or growth needs.

SBA loans are helpful for instances where there is a collateral shortfall, a historically risky industry (restaurant), or when a borrower needs the benefit of increased cash flow from a potentially lower down payment and/or longer term.

How to apply for an SBA loan

The first step in getting an SBA loan is to make sure you qualify. Eligibility requirements vary based on the particular loan program. Webster Bank, unlike some lenders, offers SBA loans to start-ups as well as established businesses.

The SBA also considers the following criteria:

• Your business must be for-profit and located in the U.S.
• It must be independently owned and operated.
• You must show a clear need for financing and a defined business purpose for the funds.

If you qualify, be prepared to offer a personal financial guarantee from anyone who owns 20% or more of the business, along with collateral or a down payment for certain SBA loans.

The loan process can take one to three months to complete. The application is detailed, so be prepared to provide documentation.

The best SBA loan for your business

There are several SBA loan options available — each with its own terms and conditions. Options include express loans, microloans, disaster relief, international trade loans, business acquisition loans, loans for fixed assets, and more.

The best SBA loan for your business will depend on what you plan to use the funding for. Your Webster Bank Relationship Manager can help you understand your options and choose an appropriate program.

Webster Bank has partnered with the SBA for over 25 years. As a preferred SBA lender, we have the leadership, experience and deep understanding of SBA programs to enable us to effectively serve our small business owner clients. Contact a Webster Bank Business Banking Professional for more information today.

All credit products, pricing and overdraft protection are subject to the normal credit approval process. Some applications may require further consideration and/or supplemental information. Certain terms and conditions may apply. SBA guaranteed products may also be subject to additional terms, conditions and fees. Requires a Webster business checking account which must be opened prior to loan closing and which must be used for auto-deduct of payment.