Start Up Businesses and Business Loans
Today, businesses are being formed monthly at a very fast rate. For a business to success, it needs enough capital for its operations, and if you are one of these start up business owners, that is what you are looking for. There are start up businesses, expanding businesses, and businesses that are transferred to new owners that need business loans for the upkeep. Today, these types of business owners can take advantage of business loans designed for them. If you want to know what these business loans are, they are discussed in brief below.
The Small Business Administration or SBA offers these different types of business financing. 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. 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. The borrower can get options for SBA loan forgiveness if the loan terms are affected by economic or policy changes.
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. Business loans are also necessary for construction, equipment, or buying real estate. 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.
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. Among all the types of business loans, this is the most common and the most flexible. You have a 10 year term for capital loans and 25 years for fixed asset loans for this type of loan with a maximum loan of $5 million.
Small loans are ideal for new or growing businesses. These types of loans are called microloans which are ideal for startup companies that only need loans of less than $50,000. 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. You can loan up to $5.5 million for 10 or 20 year maturity terms.
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.
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