Starting a business can be exciting, but it also requires access to capital. Small Business Administration (SBA) loans are one of the most popular financing options for entrepreneurs looking to get their businesses off the ground. SBA loans offer several advantages over other types of financing, such as lower rates and longer repayment terms. But there are different types of SBA loan programs available, and choosing the right one is key to getting your business started on solid footing.
7(a) loans are the most common type of SBA loan. These loans provide funding for businesses to purchase land, equipment, and other resources needed to start or expand their operations. The maximum amount for a 7(a) loan is $5 million, with repayment terms up to 25 years depending on the use of funds. It’s important to note that these loans require collateral, which can put some entrepreneurs off; however, they typically offer lower interest rates than traditional bank financing options.
504/CDC (Certified Development Company) loans are similar to 7(a) loans in that they help small businesses acquire necessary resources like land and equipment. However, 504/CDC loans are geared specifically toward businesses that need to purchase a building or expand their operations. These loans can provide up to $5 million in financing, and they have longer repayment terms of up to 25 years.
Microloans are small-scale SBA loans that offer amounts of up to $50,000 for start-up or growing businesses. They’re intended to help entrepreneurs with limited resources acquire the funds needed to launch their businesses. Microloans typically have short repayment terms (6 months – 5 years) and higher interest rates than other types of SBA loan programs.
Disaster Relief Loans
Disaster Relief Loans are designed to help businesses rebuild after being impacted by a natural disaster. These loans can provide up to $2 million in financing and have repayment terms of up to 30 years. Disaster Relief Loans are only available in areas that have been declared a natural disaster by the U.S. President or Congress, and they must be used for specific purposes related to rebuilding efforts.
No matter which type of SBA loan you choose, it’s important to do your research and find the right option for your business needs. With so many options available, entrepreneurs can get the funding they need to start their businesses on solid footing while taking advantage of attractive interest rates and repayment terms. Contact Royall Capital Funding today to explore our SBA loan programs.