Available Small Business Administration Loan
Small business administration loan must be important therefore for a budding entrepreneur to know its various loans so he may entitle himself to it, and make his business dreams a reality.
When one finds himself in the position of needing a loan for a business, he must turn to the Small Business Administration (SBA) for it. The SBA was created in 1953 for the interests of small businesses. The main goal of it is to help Americans start, build and grow businesses.
There are three basic loans from SBA for the budding entrepreneur:
Basic 7(a) Loan Guaranty
When one is not able to get loans from normal channels, the SBA would provide the Basic 7(a) Loan Guaranty, which targets those who plan to start up a new business. In terms of flexibility, this loan is the most flexible, since the loan can be used for a variety of purposes for the business, such as physical installations, manpower development and such. The loan maturity can reach up to 10 years and is generally 25 years for fixed assets.
Certified Development Company (CDC), a 504 Loan Program
This provides long-term, fixed rate financing to those companies that need to acquire real estate or equipment or machinery for expansion or modernization. These are for fixed assets such as buildings and land. The companies that usually need the loan are those that require “brick and mortar” financing. The maximum debenture is $1,500,000 when one needs for the job creation or community development objective. In general, a business must create or retain a job for every $50,000 the SBA has provided for. The 504 cannot be used in working capital, repaying debt or refinancing. The project assets are the collateral in this program.
Microloan, a 7(m) Loan Program
Usually for non-profit organizations, this loan provides a short-term loan of $35,000 to small businesses and non-profit organizations. On average, the given loan would be around $13,000. This is a localized process as applications are submitted to the local intermediary and all other credit decisions are made at the local level. Maximum years are 6 years. Most of the decisions are made by the lender. In general, interest rate would be around eight to thirteen percent.
Should you be a victim of disaster, you may be eligible for financial assistance from the SBA. There are two types of loans: Personal Property, where you are given at most $40,000 to help you repair your home, and the Real Property, where a loan of $200,000 will be given to return the home to its pre-existing condition before the storm.
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