Chances are good that you have already heard about SBA loans. You probably know that they are particularly convenient because they are designed with the needs of small business owners in mind. But how do SBA loans work, really? Keep reading and discover the answer.
How Do SBA Loans Work?
Before we delve into the details, let’s take a closer look at the acronym “SBA.”
SBA stands for Small Business Administration, a government agency whose stated goal is to help entrepreneurs plan, start, and grow their small businesses.
This is important because, as you might imagine, having the backing of the U.S. government can make things a lot easier for any entrepreneur.
However, it’s worth keeping in mind that when you take out a loan from the SBA you are not getting money from the government. The SBA only guarantees the loan, reducing the risks for lenders and making it easier for entrepreneurs to gain access to capital.
Which Type of SBA Loan Works for You?
While the basic principle behind all SBA loans is the same, no two small businesses are identical. That’s why the SBA offers different types of loans.
The two most popular SBA lending programs are 7(a) loans and 504 loans. Both loans are named after the sections of the acts that made them official in 1953 and 1958, respectively.
When it comes to choosing an SBA loan, your decision will come down to the amount of money you need and how you plan to use the proceeds of the loan.
- 7(a) loans:Capped at $5 million, with terms that range from 5 to 25 years depending on the purpose of the loan (real estate, equipment acquisition, working capital, etc.), and a minimum down payment of 10%.
- 504 loans:Can be used for the purchase of long-term machinery/equipment of for the purchase, construction, or improvement of buildings or new facilities. Capped at $5 million, with terms of 20-25 years (for commercial real estate) or 10 years (for equipment) and a 10% down payment.
Gellyfish: Certainty of Execution in SBA Loans
Looking for SBA loans in California, or anywhere in the United States? Gellyfish is here to help. We offer financing with the certainty of execution you need to take your business to the next level.
Contact us today by email (firstname.lastname@example.org), telephone (877-800-4493), or social media (Facebook, Twitter, LinkedIn), to schedule a free consultation or to learn more about our full range of financing options.