Small business owners in Louisiana may be interested in the advantages provided by government-backed Small Business Administration loans. These loans can be appealing because they are offered in a range of sizes and can be repaid over a lengthy period at relatively low interest rates. The interest rates for alternative business loans can be substantially high, but bank loans backed by the SBA tend to have interest rates of around 7 percent APR. However, many business owners may face difficulties when applying.

In general, SBA loans are not targeted to startup businesses. They are aimed more towards small companies who have been in business for a few years already rather than a substitute for coming into a startup business with capital. There are alternatives for startups that are the types of small, local businesses unlikely to spark the interest of venture capitalists. Local nonprofits or online sources can offer alternative loans based on cash flow or a mission to foster small business growth.

Other businesses may have issues if the business owner has a low credit score. In general, SBA loans require a credit score of 600 or higher. There are other types of short-term business loans that do approve borrowers with lower credit scores, even if they are accompanied by higher interest rates. Some banks that offer SBA-backed loans also want to see a business with collateral, even though the SBA guarantees 75 percent of the loan. Short-term lenders are unlikely to carry the same restriction.

Obtaining a business loan can be important to starting and growing a small enterprise. When launching a new venture, a business law attorney can help entrepreneurs to start off on the right foot by choosing the most appropriate form of legal entity.