What are the Different Types of SBA Loans?
The Small Business Administration, SBA, is your supportive friend to your small business. Knowledge is also your rewarding friend, so read on to learn about the many options for SBA loans you can seek out.
SBA 7a Loans
7a loans are the headlining loan for the SBA. They are the most common loans that hold their worth because of their flexibility and simplicity. These loans are meant to be used for expansion and financing. A small business can leap from startup to contender by using up to five million dollars from a 7a to acquire new employees, purchase working capital and manufacturing equipment, focus on marketing and advertising, and refinance their debt.
SBA 504 Loans
These loans are for the ‘think big’ purchases– land, real estate, and construction. If your business is looking to build a new manufacturing center or facility, and you are thinking of the long-term activity your business conducts, then a 504 is your best bet. You are more restricted with this loan’s money since the non-profit CDC (Community Development Corporation) is responsible for up to 40% of the loan. On top of that, up to 50% of the loan is through the private sector, often banks. If you would like to expand your small business in terms of facilities and land, be prepared to work with your lenders and their expectations.
SBA Microloans
These are as small-purposed and incremental as their name suggests, but some businesses are in the need for just that. Microloans are used for expansion like 7a loans but can’t be used for financing debt. They are able to go up to $50,000 and are friendly options for startups.
SBA Disaster Relief Loans
This loan is the relief small businesses get from the SBA in a state of disaster. Natural disasters and financial emergencies, such as storm damages and employee or large asset loss, are usually under the disaster relief coverage. The priority with these loans is, first and foremost, recovery. These loans are not used to get ahead, but to recover and lost ground from impactful damages to your small business. For example, repairing and replacing working capital is considered relief and recovery, but upgrading them is not. These loans are for up to two million dollars and repayment is on a case by case schedule determined by the SBA.
SBA Export Loans
If you are at the stage in your business growth that encourages you to expand into new and foreign markets outside the States, then an export loan is what you should look into. It is worth noting that exports have been growing in income share for the United States’ markets, so maybe moving into foreign markets is the right decision for meaningful expansion for your small business. There are also three divisions of the export loan program, each dealing with the positive and negative results of both importing and exporting. If imports have damaged your business, there is a division in the export loan program that can help you recover. On the other hand, if exporting your business is too costly, the same program can help you out.