As mentioned earlier, there are many SBA loan programs to choose from and each loan is tailored uniquely, or you can decide to go through private fundings like https://certifiedbusinessloans.com/.
Microloan programs are loans offered by SBA for small business owners, especially for those who are starting out in their field. These loans can be used for various purposes, such as purchase of supplies, inventory, equipment, furniture and other tangible assets except real estate. Other items not allowed by this loan type is payment of existing debt. The Small Business Administration makes the loan available through various nonprofit organizations and intermediary lenders. These institutions are well-versed in lending and proving assistance to borrowers. The amount of loan is determined by the lenders, which may vary anywhere between $13,000 to $50,000 based on the credibility of the borrower. The loan repayment terms may also vary depending on factors such as loan amount, use of funds and requirements of the borrower. Microloan programs typically come with six years of repayment term.
7(a) loans are SBA loans that are lent to borrowers looking for flexibility in loan repayment. These loans can be used for various business activities, including the purchase of machinery, equipment, tools, furniture, fixtures, land, as well as construction and purchase of new and existing buildings. Other uses of this loan include but not limited to acquisition, operation, and expansion of business. However, the maximum amount of loan that is lent through 7(a) program is $5 million. The lenders are SBA approved participants in the market. Loans come with a repayment term of 10 years for working capital and typically around 25 years for fixed assets.
More Loan Programs
Real estate and equipment loans are cut out in such a way that the business owner can take maximum advantage of the loan program if the business he or she intends to build eventually is a medium or big sized one. The CDC/504 loan program is offered in collaboration with SBA as well as major participating lenders with the SBA covering almost 40 percent of the cost, lenders up to 50 percent and borrower the rest. Funds from this loan program can be used for a variety of purpose, such as purchase of business buildings, real estate, machinery, equipment, as well as refinancing of existing debt. However, this loan cannot be used to purchase inventory or utilized for working capital. The maximum lending amount is $5.5 million with a 10 year or 20 year maturity term.
Disaster loans are offered to qualified businesses when the business faces damage due to accidents or disaster. These loans can be used to pay for the repair of damages as well as replacing real estate, equipment, and machinery if needed. The maximum loan amount is $2 million that carries a very low-interest rate.