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Different Types of Start Up Business Loans
It has been noted that every month, thousands of businesses are formed in the country. There is a need for start up businesses for funding so that it can help their business to grow and 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. 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. 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. SBA loan forgiveness is available, whatever happens.
You can get a business loan for many types of business needs. As we have already mentioned earlier, you can use business loans to start a business, buy a business, or expand 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.
Below are some of the loans available for business owners.
The 7(a) loans can be used for working capital, to buy real estate, to construct or renovate buildings, or for debt consolidation. Among all the types of business loans, this is the most common and the most flexible. For this type, you can loan up to $5 million which matures in 10 years for capital and 25 years for fixed assets.
Small loans are ideal for new or growing businesses. For your start up, if you need less than $50,000, you can apply for a microloan. In this type of loan, repayment terms are shorter which is 6 years.
For real estate and equipment loans, the CDC/504 loan program provides long-term, fixed-rate financing for business equipment. This loan cannot be used for working capital or inventory. The maximum loan amount is $5.5 million for a 10 or 20 year maturity term.
If you business has suffered due to a natural calamity, you can apply for disaster loans. To repair real estate or damaged equipment they can loan a maximum amount of $2 million.