An Effective Guide to Small Business Start Up Loans

Startup businesses are integral part of the economic system of the United States, thereby creating job opportunities and adding innovative products to the industry. The US Small Business Administration is dedicated to support the businesses by providing services and tools at reasonable rates. It also offers small business start up loans to allow the businesses acquire essential assets and preserve capital in the volatile market.

This type of fund is not offered by SBA directly. It is designed by the lending partners and the Small Business Administration act as guarantors for the partners. It minimizes the risk for both partners as well as borrowers. Those who do not have access to other funding sources can get hold of this type of borrowing option. Here are a few small business loans offered by this US organization.

7(a) Loan

This type of financing options is best for start ups as well as small businesses that search for a lot of money. The amount varies from 350,000 to 5 million dollars. In order to get this loan, you should be a business owner who earns more than one million dollars every year. Plus, you must demonstrate the reason for procuring the money.

Small loan programs

This type of loan is designed to motivate the lenders to offer money up to 350,000 dollars and charge low rate of interest. Under this program, the authority offers short term funds to the small businesses including the non-profit organizations associated with childcare services. Plus, these funds are offered to intermediary lenders by SBA and the eligibility criteria for loan approval are determined by the lender. The repayment period can be extended up to six years. However the SBA formulates particular guidelines related to small loan approval process. For example, these funds are not used for buying properties or even for paying the existing debt. They can be used for buying inventory, equipment and so on.

504 loan programs

This long term loan helps you to acquire commercial properties, devices as well as other related things. Few people also use it to modernize the facilities associated with energy efficiency. The rate of interest is fixed and does not increase at random manner. Plus, the bank and other lending organization prefer this type of program because it reduces the risk of nonpayment of the loan by the users.

SBA Express Loan

These funds are used for buying vehicles, inventories, machines and other devices. The loan amount varies from 25,000 to 350,000 dollars. Unlike the conventional financing sources, these funds offer longer maturity time and easier lending terms.

There are multiple private sector lending organizations and bank that offer Small Business Start Up Loans for the businesses. It is important to remember that the lending agencies do not provide the same types of SBA loans. In fact the lending programs may vary based on the individual bank rules. It is vital that you should select an appropriate program and a reliable provider based on financial situation as well as requirement.

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