Different Types of Start Up Business Loans
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. 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. The different types of startup loans are given below.
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. SBA loan forgiveness is available, whatever happens.
A start up business loan can be used in many ways. Business loans are needed for starting a business, working capital, buying a business, or expanding your current one. If you need to buy or make a new building, renovate an old one, or if you need to purchase equipment and machinery for your business, then a business loan is also necessary. 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.
Here are some types of business loans for small 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 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.
If you have new or growing businesses, you might just need a small loan. 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.
The CDC/504 loan program is a long-term, fixed rate financial for real estate and equipment. Working capital or inventory are not included in this type of loan. 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. A maximum loan of $2 million can be applied for to repair damaged real estate or equipment.