4 Types of SBA Loans Every Business Owner Should Know

4 Types of SBA Loans Every Business Owner Should Know

The Small Business Administration (SBA) in the United States offers a variety of loan programs designed to meet the financial needs of small businesses. If you are starting a new venture or need to expand your existing business, an SBA loan can provide the necessary funds. Let’s dive into the four primary types of SBA loans:

1. SBA 7(a) Loans

The most popular and versatile type of SBA loan is the 7(a). This program is designed to meet a wide range of business needs, from purchasing or leasing new or used equipment, refinancing existing business debts, or buying an existing business or franchise. The maximum loan amount for 7(a) loans is $5 million, with the SBA guaranteeing up to 85% of loans up to $150,000, and 75% of loans over $150,000.

2. SBA 504 Loans

The SBA 504 loan program is specifically for businesses looking to make major fixed asset purchases such as land or buildings. This loan pairs an SBA-guaranteed loan with a loan from a Certified Development Company, a private, non-profit corporation set up to contribute to the economic development of its community. The maximum amount for 504 loans is also $5 million, making it a great option for businesses planning large-scale expansion projects.

3. SBA Microloans

For smaller financial needs, the SBA Microloan program offers loans up to $50,000. This program is ideal for startups and small businesses that need smaller amounts of capital for working capital, inventory, supplies, furniture, fixtures, machinery or equipment. It’s important to note, however, that microloans cannot be used to refinance existing debt or purchase real estate.

4. SBA Disaster Loans

SBA disaster loans are designed to help businesses recover from declared disasters. These loans can be used to repair or replace real estate, personal property, machinery, equipment, inventory, and business assets damaged or destroyed in a declared disaster. Maximum loan amounts can reach up to $2 million, depending on the extent of the damage.

In conclusion, understanding the different types of SBA loans can help business owners make more informed decisions about financing. Every business is unique and has different needs, so it’s vital to choose the SBA loan that’s the best fit for your specific circumstances. Always consult with a financial advisor or a loan specialist to ensure you’re making the best financial decision for your business. If you need SBA financing, contact Brightview Commercial Capital today.