Today, businesses are being formed monthly at a very fast rate. If you are one of these start up businesses, then you will definitely need enough capital to help your business succeed. Whatever business you have, whether it is a new one or if you are expanding your current one, or if you are thinking of buying an existing one, you will definitely need a business loan for keeping up with your business. Today, these types of business owners can take advantage of business loans designed for them. The different types of startup loans are given below.
It is the SBA or Small Business Administration that offers different types of business financing. Although it is not directly from the government that SBA loans come from but from commercial lending partners that the SBA guarantee. This type of arrangement reduces the risk for both the lender and the borrower. The government sets the requirements for the loans and economic or policy changes, the terms of the loan can get affected. If this happens, you have options for SBA loan forgiveness.
You can get a business loan for many types of business needs. Business loans are needed for starting a business, working capital, buying a business, or expanding your current one. You can also get loans if you are constructing a new building or renovating an existing one or if you need equipment, machinery or other supplies for your business. Other uses of a business loan are for debt consolidation, or home or business repair after a natural calamity. These different uses of business loans have different requirements for down payments and collateral.
If you are a business owner, here are some of the business loans that you can take advantage of.
If you need working capital, want to buy estate, construct or renovate buildings or consolidate your debts, then you can use a 7(a) loan for these purposes. This is the most common and flexible business loan. For this type, you can loan up to $5 million which matures in 10 years for capital and 25 years for fixed assets.
You only need a small loan if your business is relatively new or beginning to grow. For your start up, if you need less than $50,000, you can apply for a microloan. It has a shorter repayment term of 6 years.
For real estate and equipment loans, the CDC/504 loan program provides long-term, fixed-rate financing for business equipment. Working capital or inventory are not included in this type of loan. You can loan up to $5.5 million for 10 or 20 year maturity terms.
Disaster loans are available for business that have suffered natural calamities. A maximum loan of $2 million can be applied for to repair damaged real estate or equipment.