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SBA Loan: Options, Benefits, and Lenders Part 2 of 2
In this second installment, we will further examine what kinds of SBA loan options are available, and for what kinds of businesses they are most advantageous. We will also discuss the different types of SBA lenders. There are several different lending programs for those who qualify for an SBA loan. However, it should be noted that not every SBA approved lender offers every loan option; some lenders may be flexible than others. SBA loan programs are generally intended to encourage long term small business financing, however, actual loan maturities are based on several different factors. 1) the ability to repay, 2) the purpose of the loan proceeds, and 3) the useful life of the assets financed. However, maximum loan maturities have been established: twenty-five years for real estate and equipment and seven years for working capital. Basic 7(a) loan Guaranty: The 7(a) is an SBA guaranteed loan provided through SBA certified commercial lending institutions. The maximum loan amount for a 7(a) is $2 million, with the SBA guaranteeing up to 75% or $1.5 million. Interest rates for 7(a) SBA loans are usually negotiated between the borrower and the lending institution. However, the SBA itself has set maximum interest rates depending on the loan amount, the highest rate being 4.75 percent on a loan of $25,000 or less with a maturity of seven years or more. Because of it's flexibility, the 7(a) is ideally suited for start-up or small growing businesses who are denied financing through other sources. The loan funds can also be used for a wide variety of purposes: renovation, real estate, equipment, payment of prior debts, etc. Certified Development Company (CDC), a 504 Loan Program: The 504 SBA loan is designed to not only benefit the small business that receives the loan funds, but also the community in which the business resides. Each 504 loan is administered through a CDC, a private, nonprofit corporations set up to contribute to the economic development of their specific community or region. The CDC will make small business loans up to a maximum of $2 million with the understanding that the business will use the funds in a manner that will further community or regional public policy goals. Typical goals may include: business district revitalization, export expansion, rural development, expansion of minority business development, etc. In total, there are about 270 CDCs nationwide, each covering a specific geographical area. Interest rates on 504 loans are pegged to an increment above the current market rate for five-year and 10-year U.S. Treasury issues. Maturities of either 10 or 20 years are available. The 504 loan program is ideal for businesses in need of "brick and mortar" financing such as equipment or building acquisition. MicroLoan, a 7(m) Loan Program: The MicroLoan Program provides very small loans to start-up or growing small business concerns. Under this program, the SBA makes funds available to nonprofit community based lenders who act as intermediaries. These lenders in turn make loans to eligible borrowers in amounts up to a maximum of $35,000. The average loan size is about $10,500. Applications are submitted to the local intermediary and all credit decisions are made on the local level. In addition, each intermediary is required to provide business based training and technical assistance to its borrowers. Individuals and small businesses applying for microloan financing may be required to fulfill training and/or planning requirements before a loan application is considered. This type of SBA loan is ideal for small businesses that need extra money for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery or equipment. However, the loan funds may not be used for the purchase of real estate or to pay existing debts. If you qualify for and receive an SBA loan, you can look forward to several benefits. SBA loans typically have longer maturities than comparable bank loans. Because you will be paying the loan back over a longer period of time, down payments and interest rates are usually lower which means you're monthly payment will also be significantly lower than it would be under the terms of a conventional loan. Cameron Brown is an internet marketer specializing in ranking automation. For information on how an SBA Loan can help you, visit Security National Capital.
MORE RESOURCES: Former Rocky Mountain Bank loan officer sentenced to prison, fined for fraud, money laundering crimes Department of Justice Updated PPP loan forgiveness applications and rules unveiled Journal of Accountancy Pausing Federal Student Loan Payments The White House Taxpayers need clarity on coordination of ERC and PPP loans Journal of Accountancy Loan program for women, minority entrepreneurs expected to launch in spring - Salisbury Post Salisbury Post Guidance issued for PPP first-draw loan increases, reapplications Journal of Accountancy Trump's loan extension on a Park Avenue building shows his debt options Crain's New York Business Hotel loans become bigger headache at M&T Bank American Banker State makes loans for South Arkansas water projects Magnoliareporter Minnesota briefs: 10 Hibbing businesses awarded loans to weather pandemic - Minneapolis Star Tribune Minnesota briefs: 10 Hibbing businesses awarded loans to weather pandemic Minneapolis Star Tribune Chemung Financial sells nonperforming commercial loans American Banker What's Working: Here's how Colorado is rolling out federal unemployment benefits, plus Paycheck loans are hopping The Colorado Sun Local students react to student loan deferral extension WWAY NewsChannel 3 Garrison looking for more applicants for HRA loans | Local | messagemedia.co Aitkin Independent Age 2020 ends with 3.4 million loans in delinquency HousingWire Vaccine Critics Received More Than $1 Million in Pandemic Relief Loans The New York Times The real cost of payday loans KENS5.com ‘It Was a Joke’: Some Small Businesses Got $1 Relief Loans The New York Times Five communities band together to provide forgiveable loans to small businesses impacted by the coronavirus Boston Herald When Can I Apply for a P.P.P. Loan? The New York Times Fitch Affirms Nelnet Student Loan Trust 2020-2 Fitch Ratings EPA loans King County $96.8 million to prevent untreated water from spilling into Puget Sound | Vashon-Maury Island Beachcomber Vashon-Maury Island Beachcomber Riesel gets state loan to remedy arsenic water woes Waco Tribune-Herald Wilkes-Barre extends payment deadline for emergency relief loans Wilkes Barre Times-Leader Home Loans & Grants for Disabled Individuals | 2021 The Mortgage Reports During early mornings and weekends, F&M Bank handled hundreds of Paycheck Protection Program loans - Salisbury Post Salisbury Post Interest pause to lessen blow on graduates when loan payments come WHBF - OurQuadCities.com HBCUs receive boost from capital loan forgiveness Inside Higher Ed East Grand Forks' COVID-19 business loan program up and running Grand Forks Herald Biden administration to extend student loan payment pause on Day 1, transition officials say MarketWatch US Long-Term Mortgage Rates Slip; 30-Year Loan at 2.77% U.S. News & World Report Details of Jordan Morris’ loan to Swansea City Sounder At Heart Best Bad-Credit Loans of January 2021 NextAdvisor Fitch Rates GTT's Priming Loan 'B'/'RR1'; Downgrades First-lien Term Loans; Maintains RWN Fitch Ratings Report: Chelsea reject West Ham loan enquiry for Emerson Palmieri Sports Illustrated Quicken Loans LLC plans to add 700 jobs in downtown Cleveland, city to offer job creation grant cleveland.com Fitch Downgrades ITT Holdings to 'BB+'; Outlook Stable Fitch Ratings AI Can Make Bank Loans More Fair Harvard Business Review Fitch Assigns SJM Holdings First-Time 'BB+' IDR with Negative Outlook, Rates Bonds 'BB+' Fitch Ratings Types Of Personal Loans Forbes Expenses used for PPP loan forgiveness: Deductible or not? Journal of Accountancy Secretary DeVos Extends Student Loan Forbearance Period Through January 31, 2021, in Response to COVID-19 National Emergency U.S. Department of Education What Biden’s Election Could Mean for Student Loans The New York Times PPP recipients can apply early for loan forgiveness, SBA says Journal of Accountancy What Is A Payday Loan? Forbes Home-Equity Loans and Home-Equity Lines of Credit: How They Work and When to Use Them The Wall Street Journal Who owes the most in student loans: New data from the Fed Brookings Institution New PPP loan forgiveness applications released Journal of Accountancy PPP loan forgiveness: What CPAs should be doing now Journal of Accountancy COVID-19 relief bill addresses key PPP issues Journal of Accountancy Understanding the Types of Federal Student Loans Available | Student Loan Ranger | US News U.S. News & World Report Options for clients with student loans during the pandemic Journal of Accountancy Interest Rates Are Low, but Loans Are Harder to Get. Here’s Why. The New York Times Secretary DeVos Fully Implements President Trump's Presidential Memorandum Extending Student Loan Relief to Borrowers Through End of Year U.S. Department of Education |
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