A business loan is a key component in the strategy of any business, regardless of its size or scope. Here’s everything you need to know about business loans, from a basic definition to the best options in business loans depending on what you need the capital for.
What Is a Business Loan?
A business loan works just like any other type of loan. You get money from a financial institution and you agree to repay that money over a set period of time. The main difference is that, unlike a personal loan, the proceeds from a business loan are destined to be invested in your business.
Business loans can be used for a variety of purposes, including:
- Purchase real estate
- Renovate or improve existing facilities
- Purchase equipment
- Working capital
- Among others
What Are the Best Alternatives in Business Loans?
There are many lenders on the market nowadays, but if you are a small business owner, SBA loans may be your best bet.
Since these loans are backed by the U.S. government through the Small Business Administration, they offer some unique advantages, for example:
- Requirements are usually less stringent compared to bank loans
- They usually have lower down payment requirements
- Interest rates tend to be lower
- They feature longer repayment terms
The two most popular SBA loans are 504 loans and 7(a) loans. The one you choose will depend on how you plan to use the proceeds of the loan.
What’s the SBA Loan That Works for Me?
This table will help you decide which is the SBA loan that works for you:
| 504 Loans | 7(a) Loans | |
|---|---|---|
| Purposes | Purchase commercial real estate, purchase existing buildings, acquire long-term machinery and equipment, modernize existing facilities |
Short- and long- term working capital, refinancing current debt, purchase furniture, fixtures, and supplies |
| Maturities | 10 to 20 years | 7 to 25 years |
| Limit | $5 million | $5 million |
| Type of rate | Fixed | Fixed/Variable |
Finally, it’s worth remembering that this is the best time to take out an SBA loan. Check out this previous post to discover why. And if you need more help making sense of the world of financing, don’t forget to take a look at our glossary of loan terms.
Gellyfish: Certainty of Execution in Business 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 (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.
