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Different Types of Start Up Business Loans
You will note that at this present time, so many businesses are appearing on the scene almost every month. For a business to success, it needs enough capital for its operations, and if you are one of these start up business owners, that is what you are looking for. 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. The good news is that there are a lot of start up business loans available for those struggling to get funds for their needs. If you want to know what these business loans are, they are discussed in brief below.
The Small Business Administration or SBA offers these different types of business financing. SBA Loans do not directly come from the government, but they have commercial lending partners that grant these loans which are guaranteed by the SBA. With this arrangement, the lender and borrow risks are reduced. It is the government, however, who sets the requirements of the loan, and its terms can get affected when there are changes in economy or in policy. If this happens, you have options for SBA loan forgiveness.
There are many uses for a business loan. 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. Debt consolidation, or home or business repair after a disaster are the other uses of a business loan. Down payments and collateral may differ for these different uses of business loans.
Below are some of the loans available for business owners.
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 business loan is very common and flexible. The maximum loan you can get for this type of loan is $5 million for 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. These types of loans are called microloans which are ideal for startup companies that only need loans of less than $50,000. It has a shorter repayment term of 6 years.
The CDC/504 loan program is for real estate and equipment loans which is a long-term, fixed rate financing. Working capital or inventory are not included in this type of loan. You can loan up to $5.5 million with 10 or 20 year maturity term.
Disaster loans are available for those businesses that have suffered because of a disaster. To repair real estate or damaged equipment they can loan a maximum amount of $2 million.