Small business loans are an important resource for entrepreneurs who need working capital to launch or grow their businesses. The Small Business Administration (SBA) offers loan programs designed to help small business owners get the funds they need to make their dreams a reality.
Recent Developments In the SBA Loan Program
In 2021, the SBA’s loan programs provide financing up to $5 million at fixed rates, allowing entrepreneurs to purchase inventory, pay rent, hire employees and make other investments into their businesses without having to commit large amounts of personal capital. These loans also offer repayment terms that are more favorable than many traditional bank loans.
The Popular SBA 7(a) Loan
One popular loan program offered by the SBA is the 7(a) Loan Program. This program provides funding for a variety of business needs, from start-up costs and working capital, to buying property or equipment and refinancing debt. The maximum amount of money available through this program is $5 million, with interest rates ranging from 6% to 13%. Generally speaking, borrowers have up to 25 years to repay these loans depending on the type of asset purchased with the funds. Additionally, some borrowers may qualify for longer repayment terms or even reduced interest rates if they meet certain criteria set forth by the SBA.
The SBA 504 Loan
The SBA also offers 504 Loans as well as Economic Injury Disaster Loans (EIDLs). The 504 Loan Program is designed to provide long-term financing for larger projects such as purchasing real estate or big pieces of machinery and equipment. These loans typically require a 10% down payment and can be used in combination with other financing options such as bank term loans and lines of credit. Interest rates are typically fixed and based on current market conditions at the time of signing the loan agreement; however, repayment terms vary depending on what kind of asset was purchased using these funds.
What’s an EIDL SBA Loan?
Lastly, EIDLs are available for small businesses affected by natural disasters or other economic hardships due to unexpected circumstances beyond their control. These types of loans can provide up to $2 million in working capital with interest rates ranging from 3% – 3.75%. Repayment terms may extend up to 30 years depending on how much money was borrowed and what it was used for; however, all EIDLs must be repaid regardless if disaster-related expenses have been covered or not.
This was meant to lightly touch on the federal options for you if you’re seeking a high-quality loan with the greatest assurance. For a more in-depth analysis, check us out at Array Financial; visit our website and drop us a line.