For start-up businesses and those with poor credit, an SBA loan often offers the only access available to the capital that every business needs. Though the loans bear the initials of the Small Business Administration, the agency itself does not actually provide any money. Rather, it guarantees loans made by other lending institutions to businesses that qualify for them.
The loans themselves come in a variety of forms, depending upon the borrower’s needs and qualifications. There is a financing option available for many different needs, so borrowers should take the time to become familiar with all of the different options t ensure that they apply for the right loans.
The 7(a) loans
Lenders most commonly make loans that fall under the 7(a) category. Loans of this nature are targeted toward businesses that are run by veterans, situated in rural regions, or dealing with export issues. There are many others who qualify as well, including businesses that have been directly impacted by NAFTA and other free trade agreements.
Microloan lending is a type of lending that united the Small Business Administration with local nonprofit entities who have experience dealing with borrowers. These loans typically provide financing of as much as $50,000, and are usually used for capital expenditures involving furniture, inventory, supplies, and even operating cash.
Certified Development Company loans
The third main category of loans is provided through these Certified Development Companies under the 504 Program. The loans are commonly used for community economic development, including street repairs, land acquisitions, utilities, and community beautification.
There are, of course, other types of Small Business Administration loans in addition to those listed here. For businesses that are having trouble obtaining traditional financing, the best thing to do is to contact a local lender and ask about available SBA loan opportunities today.
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