SBA loans are a bit of a misnomer, in that the Small Business Administration does not extend loans itself. Instead, it guarantees a portion of that loan which would be taken out with a traditional lender, so that if the borrower defaults on payments, the SBA would step in to repay that percentage of the loan. Here are some of the basics about the available types of SBA loans.

7(a) loans

This is the most popular type of SBA loan, and it provides a great many options for small business owners. It can be used for real estate or equipment purchases, for refinancing debt, for renovations or new building construction, seasonal business needs, and for operational expenses. In order to be approved for one of these loans, you’ll have to provide a sound business purpose.

504 loans 

This kind of loan is more specifically for equipment purchases and for the purchase of the real estate. That can include buildings which are already situated on the property, or it can include the construction of new buildings on the property. It can also take in renovations to buildings or improvements which need to be carried out. When you need to purchase new equipment for long-term usage, this is another ideal usage of an SBA 504 loan. If your business intention for acquiring an SBA loan is something other than has been described in the possibilities above, you’d be better off applying for a 7(a) loan, since these have broader parameters.

General Applications

Most SBA loans are awarded to small business owners who have found it impossible to acquire traditional financing through other means. These government loans are extended to such small businesses so that they have equal opportunity with competitors who may be better situated. A great many new pathways and opportunities have been provided to owners of small businesses who received SBA loans.

Is your company interested in an SBA loan? 

An SBA loan may be just what your new company needs to become firmly entrenched in the local business landscape or to spur new business growth. Contact us at Web Finance Direct to see if there are ways we can help you acquire an SBA loan that might make all the difference for your startup or new company.