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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. There is a need for start up businesses for funding so that it can help their business to grow and succeed. There are start up businesses, expanding businesses, and businesses that are transferred to new owners that need business loans for the upkeep. 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.
It is the SBA or Small Business Administration that offers 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. SBA loan forgiveness is available, whatever happens.
A start up business loan can be used in many ways. 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. This is the most common and flexible business loan. 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. 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.
The CDC/504 loan program is a long-term, fixed rate financial for real estate and equipment. This loan cannot be used for working capital or inventory. 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.