Taking out a business loan is an important step in the evolution of your organization. However, not all owners know what business loans can be used for. Keep reading to take a closer look at this important topic.
What Can Business Loans Be Used For?
Generally speaking, a business loan can be used for anything you need to grow your business. Some common ways to use the proceeds of a business loan include:
- Starting a business
- Working capital
- Purchasing inventory
- Purchasing real estate
- Renovation of existing buildings
- Purchasing machinery of other fixed assets
However, things are not as clear-cut as they seem, and there are some exceptions to keep in mind.
There are two basic types of business loans: conventional loans and SBA loans. The main difference is that SBA loans are backed by the Small Business Administration, while conventional loans are issued by financial institutions, usually a bank.
Conventional loans tend to give the borrower more leeway in how they use the money. SBA loans, on the other hand, and very specific about how you must spend the loan proceeds.
The two most popular SBA loan programs are 504 loans and 7(a) loans. Here’s what you are allowed to do with each:
504 Loans
- Existing buildings or land
- New facilities
- Long-term machinery and equipment
- Improvement or modernization of Land, streets, utilities, parking lots, landscaping, or other Existing facilities
7(a) Loans
- Short- and long-term working capital
- Refinance current business debt
- Purchase furniture, fixtures, and supplies
Learn More About Business Loans
Here’s a selection of previous posts with more tips and ideas to help you make the most of your business loan:
- Good news! Now you can refinance your 7(a) loan
- What documents do you need for a business loan?
- SBA loans vs conventional loans: the pros and cons
- Some frequently asked questions about 504 loans
- Some frequently asked questions about 7(a) loans
Gellyfish: Certainty of Execution in Business Loans
Looking for a conventional loan or SBA loan in California, or anywhere in the United States? Gellyfish is here to help. We offer financing solutions with the certainty of execution you need to take your business to the next level.
Contact us today by email (info@gellyfishcommercial.com), 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.
