5 SBA Loan Types To Support Your Small Business

There are various SBA loan types to support your small business. The Small Business Administration guarantees a considerable portion of each loan to lenders. The lender’s risk is reduced, encouraging them to provide small businesses with financial funding and resources. With an SBA loan, your small business can receive millions of dollars with a repayment period of up to 25 years. As a small business owner, identify why your company needs a loan and discover which loan would work best for you. Here are the most popular SBA loan types to support your small business.

Standard SBA 7(a) Loans

Standard SBA 7(a) loans are the most common loans. Typically, this loan is used as a startup business loan. In fact, you can use this loan to buy new land or to purchase inventory and supplies. If you are approved for this loan, you can repair existing assets, refinance debt or expand your business. To qualify, you need to have a good credit score and business history. Generally, you will have to put up collateral to secure financing. You can earn anywhere from $30,000 and $5 million with interest rates reaching up to 10%. Usually, repayment periods to not exceed 10 years. However, if it is a real estate loan, you have 25 years to repay it. Certainly, apply for a standard SBA 7(a) loan to support your small business.

CDC/SBA 504 Loans

Next, if you are looking to purchase or construct owner-occupied commercial real estate, apply for a CDC/SBA 504 loan. You will be paired with two lenders, a bank/traditional lender and a community development corporation (CDC). Typically, the bank will lend up to 50% of the needed funds while the CDC lends up to 40%. You will have to cover the remaining costs, usually as a cash down payment. Earn up to $20 million with a repayment term of up to 25 years. The bank can require up to 9.75% interest while the CDC can require up to 2.9% interest. To qualify for a SBA 504 loan, you are required to own at least 51% of the commercial property and have a credit score of 680 or above.

SBA Express Loans

Secondly, you can apply for a SBA express loan to support your small business. These are smaller quick business loans but they provide an accelerated approval turnaround. The SBA will respond to your request within 36 hours. Express loans can fund the same purposes as a SBA 7(a) loan. For example, this loan can fund business expansion, inventory and new land. You can borrow up to $350,000. Additionally, you and the lender can negotiate the interest rate but it cannot exceed 50%. Depending on the amount borrowed, you are not required to provide collateral. Certainly apply for an SBA express loan if you need funding quickly.

International Trade Loans

Furthermore, if you have any engagement in international trade, you can apply for an international trade loan (ITL). These loans are specifically for acquiring, constructing improving and modernizing US facilities and equipment. Typically, these facilities produce goods or services in international trade. To qualify, you need to be eligible for the standard SBA 7(a) loan and be a for-profit US-based business. You are required to have secure financials and good credit. Additionally, your business needs to conform to the SBA standard size. You can earn up to $5 million with an interest rate of up to 9.25%. Depending on the loan purpose, you have up to 25 years to pay it off. Certainly use an international trade loan to conduct business within international trade.

Economic Injury Disaster Loans

Finally, apply for a economic injury disaster loan (EIDL) to overcome financial distress in your small business. This loan will support your operation expenses until you can recover from the disaster. Disasters include severe storms, flooding, hurricanes and wildfires. Depending on your economic injury, you can earn up to a combined $2 million from an EIDL and a physical disaster loan. Your loan does not depend on whether your business suffered property damages. Furthermore, you will only have to pay up to 4% interest a year. Of course, your repayment term will be determined by your capability to repay the loan. Definitely apply for a EIDL if your small business needs disaster relief.

There are several SBA loan types to support your small business. In fact, there are various ways of how small business loans work. Apply for a SBA 7(a) loan to fund your startup, buy land or repair existing assets. Of course, apply for a SBA express loan for quick turnaround times. You will receive an answer to your application within 36 hours. Additionally, if your small business wants to purchase or build commercial real estate, you should apply for the CDC/SBA 504 loan. Apply for an international trade loan if you were disadvantaged due to international trade or if you need funds to support your production of goods and services internationally. Finally, apply for an economic injury disaster loan to support your small business during a time of unforeseen trouble. Certainly, there are multiple SBA loan types to support your small business.

Leave a Reply

Your email address will not be published. Required fields are marked *


This site uses Akismet to reduce spam. Learn how your comment data is processed.

Scroll To Top