In need of business financing? No worries. Let’s face it – businesses need financial backing, and that could run your pockets dry. The need for reliable, secure, accessible, and low-cost loans are, therefore, vital.
The Small Business Administration partners with banks, lenders, and other financial institutions to offer such loans. These loans are government-backed and can be used as capital or operational costs for business. These loans, though come after a hectic application process, is worth all the effort.
The loans also come with low annual interest rates.
Types of SBA Loans
The four main SBA loan programs are;
1. 7(a) loans
This is the flagship loan program for the SBA.
The loans can serve as capital, for stock purchase, and for maintaining inventory. If you are looking to purchase machinery, expand your business, or buy a real estate property, these are the loans to go for.
With this product, the federal agency guarantees loans of up to $5 million.
Specialized lenders, banks, or credit give out this loan. The interest rates and repayment period is usually flexible.
2. 504 loans Program
These are jumbo federally backed loans given out in partnership with banks and specialized companies.
The federal agency guarantees loans of up to $5 million. The funds can be used to purchase land, machinery, or other business facilities.
The processing is through the private sector, consisting mostly of nonprofits.
These are small loans, usually a maximum of $50,000. The proceeds can serve as starting capital or working capital. The funds can also be used for inventory, machinery, and to finance other business projects.
Community-based nonprofits are responsible for giving out the loan.
4. Disaster Loans
Getting your business back to recovery after a natural disaster is financially draining.
Owners of small businesses affected by natural disasters, with the help of these loans, can get their businesses back on track.
The SBA is responsible for processing these loans.
SBA Loans Interest Rates
SBA sets a limit for interest rates to be charged by its partners.
Microloans, 504, and disaster loans all have fixed interest rates. 7(a) loans, on the other hand, come with variable interest rates.
The lender determines your interest by summing up your base rate and markup. Your monthly repayment amount and total borrowing are subject to a possible change.
A variation in interest rates is also possible, depending on the amount you’re borrowing. You’re also subject to possible fees, such as processing fees and guarantee fees by SBA and other partners.
In Need of Financial Assistance?
Accessing loans can be hectic, especially for small businesses. Yet, your business still financial assistance for start-up, running, and expansion. With many lending institutions out here to make profits and nothing more, the whole process of debt acquiring and repayment can be frustrating.
The Small Business Administration and its partners will help you access secure and low-interest loans for your business. Try them out.