Obtaining a business loan is a significant for a
growing business. Once the loan is approved, a business may use it for
expansion, obtaining additional inventory, acquiring equipment and so on. When
you are start-up, it may be difficult for you to obtain loan from banks as most
of them require years of experience in the industry.
There are primarily three types of lending
institutions providing loan to small businesses: bank loans backed by the small
business administration, microloans from non-profit lenders and loans from
online lenders.
U.S. Small Business Administration provides loans to
small businesses a network of approved financial institutions (typically,
traditional banks) with its Business
SBA 7(a) loan program. They
usually provide different types of loans to meet small business needs.
Business SBA 7(a) loan is the most common type of SBA loan. These
loans can be obtained for working capital, to refinance debt or to buy a
business, real estate or equipment. SBA Express Loan and SBA Advantage Loan,
are two significant parts of business SBA 7(a) loan program.
Business SBA 504 loan is a 10-percent down, fixed-rate,
long-term loan provided to expand capital access to a small business. It allows
an entrepreneur to buy business’s real estate or machinery and get the tax
benefits and appreciation on the real estate while locking in occupancy costs
for 20 years When an entrepreneur obtain business SBA
504 loan, they can enjoy the revenue of the building or machinery
obtained through it, once the loan is paid off. They can also rent the space
out to others to make additional revenue. As the financing is available for up
to 90 percent of project cost, it offers down payment as low as 10 percent, so entrepreneur
can maintain liquidity or working capital of a business.
In order to get bank loan, one need to have
excellent business and personal credit store. If your company is especially
small or you don’t have that excellent credit score, you may need to opt for
micro lenders or commercial financing companies.
A small business loan can help to grow and expand your
business. But, if your business goes down, the loan could end up as a very
large debt on your company. Before taking a loan, it is recommended to consider
all the alternatives like raising capital from local investors to tread
carefully.
To know more about Business SBA 7a Loan and Business SBA 504 Loan, please visit at
www.commercialfundingusa.com.
