Finding the best commercial loans for your business needs can help you make the most effective use of your available financial resources. This can help your company achieve greater profitability and increased flexibility in achieving your short-term and long-term goals. Understanding the types of loans available to you in the financial marketplace can help you find the right solutions for your business needs. Here are some of the most popular loan programs available from the Small Business Administration (SBA).
SBA Advantage Loans (7a)
The SBA offers Advantage Loans, more commonly referred to as 7(a) loans, for certain small businesses.
The commercial loan terms for these financial arrangements include the following:
- Your company must operate for profit.
- You must have a reasonable amount of equity invested in the business.
- You must draw on existing resources, including personally held assets, before applying for 7(a) loans.
- The funds disbursed must be used for business purposes.
- Your business must demonstrate a need for the funds.
- Your company must not be in delinquency or default on any obligations to the U.S. government.
SBA Advantage Loans are not available to particular types of businesses. Financial institutions, life insurance companies, and foreign entities cannot apply for funding under the 7(a) program. Additionally, the funds received from the SBA cannot be used to refinance your existing debt or to repay delinquent state or federal tax obligations.
The CDC/504 Loan Program
The CDC/504 Loan program is another initiative offered by the SBA. These commercial loans are designed to provide funding for the acquisition of real estate or the purchase of major equipment for your business. The commercial loan terms of CDC/504 arrangements restrict the ways in which your business can use the funds received. For example, CDC/504 funds cannot be used to refinance debt, to invest in rental properties or to replenish inventory or capital.
Most of the requirements for CDC/504 loans are similar to those for the 7(a) loan program. As part of the application process, your company will be required to submit a Statement of Personal History for each of the owners or principal shareholders to demonstrate the good character and credit history of these individuals. If you are interested in learning whether your business is eligible to apply for the 504 program, refer to ReProp Financial’s page on SBA 504 Loans.
If you need immediate cash for inventory, equipment, furnishings or working capital, the SBA Microloan program may be ideal for your business needs. These short-term commercial loan programs are designed to allow you to access the cash you need quickly and at an affordable interest rate. The maximum amount available to your business through the SBA Microloan program is $50,000, which must be repaid in six years or less.
Microloans are made available through intermediary nonprofit organizations rather than provided directly from the SBA. As a result, the eligibility requirements for these loans can vary to a considerable degree. Microloans cannot be used to purchase real estate or to repay existing debt.
SBA commercial loans offer many advantages for your small business. By exploring these options when seeking funding for real estate acquisitions, expansions or inventory purchases, you can ensure the best possible commercial loan terms and the greatest profitability for your small business enterprise.
If you are interested in securing SBA financing in the state of California, call 1-800-444-2948 to contact ReProp Financial today!