Planning to start a business but need assistance with the capital? One good option is to avail of a Small Business Association or SBA loan. You can quickly secure the finances you need to start your business.
If it’s your first time applying for a loan, you might need to figure out what loan you will be needing. To help you out, here are different types of small business loans available whether you’re in Utah or other states.
Microloan
With a loan range of $500 to $50,000, a microloan can help you build the start-up company you’ve been dreaming of for the longest time. To qualify for a microloan, you should have:
- a for-profit business
- an average credit score (most intermediaries work with around the score of 575)
- ability to repay the loan
- collateral, which can be business or personal assets, or a personal guarantee
- good character
Disaster Loan
SBA loans aren’t only for those who want to start a business. A disaster loan, for instance, is a low-interest SBA loan designed for businesses affected by a declared disaster.
You can use the loan for repairs or replacement of damaged assets, such as equipment and machinery. You can also use it to cover payroll and operational costs. After all, the primary purpose of this loan is to initiate recovery for business owners.
To qualify, you need to be a registered business or non-profit. You should have invested equity in the company, and your financial options have been exhausted. The company should fall under a certain size standard, and you should have the ability to repay the loan.
In addition, there must be a verification that your affected business is in a declared disaster zone. The local government must have already put in a word that request for disaster loans can be filed.
7(a) Loan Program
The SBA 7(a) loan program is the most basic and most flexible loan offered to entrepreneurs planning to start a business. You can use the fund for real estate, equipment, and other business assets, long or short-term working capital, refinancing, or acquisition of an existing business.
Keep in mind, though, that this loan program isn’t suitable for real estate businesses, lending, nonprofits, and the likes. The maximum 7(a) loan amount is $2M, and loan maturity can last from seven to 25 years.
To qualify, you should have a for-profit business, the ability to invest your assets, and have good character.
CDC/504 Loan Program
This loan program is suitable for those who need assistance in long-term financing. The maximum loan amount can be $5M, given that the business can present proof for certain qualifications like having a net worth of less than $15M and an average net income of $5M or less. This loan cannot be used for other purposes, such as machinery and equipment.
It can be a little overwhelming to figure out how and where to get funding for a new business. But with SBA loans, you can be one step closer to realizing your dreams of owning a restaurant or company.
