What Kind of SBA Loan is Right for Your Small Business?

The Small Business Administration offers many resources for small businesses, including loan programs that are guaranteed by the SBA. The SBA itself isn’t a funding institution, but it backs loans made by banks and lenders to give small business owners a competitive edge in the market. Here are four of the lending programs that are offered to businesses that operate for profit and fit into the small business guidelines from the SBA.

7(a) Loans

The 7(a) loan program is the primary loan that SBA offers. It can be used for working capital, equipment, furniture, land or buildings and improvements.  These SBA loans have many variations, some of which target specific populations, such as military veterans or minority-owned businesses.

504 Loans

The 504 loan program is typically used for purchasing real estate or new machinery. The program offers fixed-rate, long-term financing for small businesses, giving them a competitive edge when upgrading. The borrower will need to provide 10 percent equity for the loan.

Microloans

These SBA loans provide short-term loans up to $35,000 to small businesses. Proceeds must be used for working capital, supplies, furniture and/or equipment. The money cannot be used for buying real estate or to pay off debt. Typically, these loans are made through an intermediary non-profit who also helps the small business with technical or management assistance.

Loan Pre-qualification

It can be difficult to secure financing from the SBA, which is why some offices offer a pre-qualification process to assist business owners in preparing their loan application. The process focuses on what the applicant can do to strengthen their loan application, not on the current assets of the business.

Which Loan Is Right For You?

The SBA program that fits into your business plan depends on many different factors. Contact Allegiant Commercial Experts to discuss lending options that can take your business to the next level.

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