The fundamentals of small business loans

Small business administration loans

• The Basic 7 (a) loans: This is by far the very popular and basic of the SBA loan programs yet. Its popularity stems from its availability to any business need and long term repayment plan. If you have a sound proposal and the proceeds are going to create assets such as purchasing real estate or expansion, machinery and equipment you can sure depend on this. However this loan is also extended for working capital needs also. Though this program is predominantly for existing businesses needing loans, start ups are also open to apply for this based on qualification. This loan suits small businesses very much because of more than one reason. The loan limit is convenient for most of the needs of small businesses and it is $150,000. The repayment term is so convenient that you can really concentrate on your business administration without having to worry about monthly installments being very high. It is designed with interest rates less than 4.75 % and term of 7 years for non real estate advances (25 years for real estate connected loans) cash management becomes lesser painful.
  
  You can use this program for small business administration equipment loans, administration small business small business loans for veterans' businesses and so on.
• Micro Loan 7(m) Loan program: When your need is small and you don't need to go for a bigger loan this is your answer. Micro loans are particularly devised to take care of smaller short period cash necessities. However tiny businesses, start ups whose short term need for cash does not exceed $ 35,000 can certainly go for this micro loan program. The loan proceeds are normally used buy the borrowers for purchasing furniture, fixtures and production related equipments or inventory. The repayment term for micro loans vary from a year to five years depending on the amount of loan. Micro loans do not insist on collateral security especially from existing and profit making businesses. Like the repayment term, rate of interest too varies as per the amount of loan and term of loan.
• The CDC (504) loans program: The amount of loan with the CDC programs for small business administration loans, is of the order of $5 million. The unique feature of this loan program is the loan proceeds are enough to purchasing real estate, plant and machinery and renovation of existing real estate. As the name suggests, the loans are given by CDCs - certified development companies. The loan can cover up to 40% of your cost in case you have a junior lien. You will be required to contribute 10 % of the equity as the promoter. Unlike the 7 (a) loans program this one is 100 % covered by SBA guaranty and the repayment term is however limited to 5 years. The other reasons for small businesses using these loans are that usage of the loan is not limited to a particular purpose but almost all of them. Consider modernization, working capital need or even vehicle and aircraft acquisition, all these can be done with 504 loans program.
• LowDoc loans: This is a low documentation loan small for businesses. This can well be used as small business administration equipment loans as there are no separate loans programs for each needs. The documentation for this being very low and has a long repayment plan extending up to 25 years for loans of $150,000. The documentation focuses on your character, experience in the line of business and ability to repay. The rate of interest as always with all SBA loans remains at below 4.75% for various terms and amounts.
• In situations such as cash flow fluctuations and small businesses finding it hard to make ends meet, CapLine loans are the answer. CapLine loans provide cash up to $ 2 million. You could be surprised to know that the scheme comes with a relatively small repayment term of five years. But this is understandable as the loan is designed to tide over the immediate cash crunches. You can opt for this loan for servicing immediate payment purchases and even for retiring high cost loans.

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