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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. 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. There are business loans available for those struggling business owners who need funds to get their businesses on the go. Below are some of these start up loans.

This business financing are actually being offered by the Small Business Administration or SBA. The SBA guarantees the loans provided by commercial lending partners and do not come from them directly. With this arrangement, the lender and borrow risks are reduced. However, the loan requirements depend on government, and if there are economic or policy changes, the lending terms can get affected. The borrower can get options for SBA loan forgiveness if the loan terms are affected by economic or policy changes.

There are many uses for a business loan. If you have a new business, want to buy a business, expanding your current business, or simply need working capital, then you can apply for a business loan. Business loans are also necessary for construction, equipment, or buying real estate. If you need to consolidate your debts, or if you need to repair your home and buildings after a disaster, then you can also apply for 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.

Business owners that need working capital, money for buying real estate, for constructing or renovating building, or for debt consolidation can apply for 7(a) loans. Among all the types of business loans, this is the most common and the most 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.

Small loans are ideal for new or growing businesses. 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 business that have suffered natural calamities. To repair real estate or damaged equipment they can loan a maximum amount of $2 million.