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.
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news
Student Loans and Financial Literacy in the Golden Age of Information: How Can Ameritech Financial Help - PR Newswire (press release)
Judges May Be Finding a New Way to Deal With Student Loans in Court, Observes American Financial Benefits Center - PR Newswire (press release)
Why Bank Overdrafts May Be a Bad Deal For You
Many banks actively encourage their clients with low balances to overdraw their accounts. That means, if the customer writes a check or uses her debit card and has insufficient funds in the account, the bank clears the check by granting a temporary overdraft (a short-term loan), up to a specific limit.
The Truth In Lending Act
With a stated objective to help consumers, Congress deemed it fit that to enhance "economic stabilization and competition among the various financial institutions," lenders must give written disclosures on cost of credit and various terminology of repayment.Thus lenders are required by law to make detailed disclosures on:Costs of all loans with the annual percentage rate (APR).
How to Make Sure You Become a Profitable Trader
Regardless of your trading style; day trading, swing trading, or position trading there is a simple step by step plan you can use to improve your odds for success.1.
Christmas Loans - A Gift on the Occasion of Christmas
It is still a few weeks to Christmas and every one is already up with demands. Little Mary, ever eager to add to her collection of dolls, wants the latest in the Barbie series.
8 Point Checklist: Evaluating Online Vendors
Secured Loans Information
A secured loan is a personal loan which is generally offered to home owners. In a typical secured loan, the home is used as collateral against the loan, meaning that should you be unable to maintain the loan repayments, your home will be at risk.
Traditional Banks Vs Online Loan Companies
In recent years obtaining loans online has become a new and somewhatunknown reality. Years ago one would make appointments with theirbank lenders and obtain loans the so-called old fashioned way.
Secured Personal Loans: Constructive Structuring for Financial Success
Credit relationships in a social system form an intricate web which extends throughout the financing environment of the community. This affects almost everybody from consumers, loan companies to government.
What are Personal Loans?
As the term implies, Personal loans are simply loans for any personal use. They're known as personal loans because the money is for personal use, such as buying a car or home improvements.
Bad is the Opposite of Good... Is It? Not with Bad Debt Personal Loans
'Bad' means 'bad' no matter where you go! It is cumbersome and heavy, a threat and negative. So, you are taking this burden of bad debt every time you make a loan application for personal loans.
Home Loans in the UK
Owning a home is the most important dream of any person. It is one of the basic necessities of life as stated by Maslow in his 'Theory of Hierarchy of Needs'.
Business Credit Scoring: Is It a Killer Application or Application Killer?
In his 1968 seminal novel, 2001: A Space Odyssey, Arthur Clark introduced HAL, a spaceship computer with artificial intelligence. Mission engineers designed HAL to carry out an array of technical orders to safeguard the ship's mission.
Cash Loans for Unemployed - for an Instantaneous Response to Needs of the Unemployed
Unemployment is generally supplemented with several other vices like poverty and indebtedness. As if these are not enough, several contingencies start making their demands, all at once.
All About Secured Loans
A secured loan is a loan agreement in which the borrower pledges property as surety for the loan; hence they are also known as homeowner loans. If the borrower continually defaults on loan repayments, the lender may take action to reclaim the debt including selling the property.
Loans For Unemployed - when your personal economy slumps during difficult times
The latest IDS figures for unemployment the claimant count measure of unemployment rose by 8,100 by April 2005 to stand at 839,400 (a rate of 2.7 per cent).
A Beginners Guide to Low Interest Debt Consolidation Loans
Looking for low interest debt consolidation loans can sometimes seem like looking for gold at the end of the rainbow, but loans with minimal interest can be had even by people with poor credit ratings. The most important things in trying to find low interest debt consolidation loans are to know how to use your collateral correctly and to know the best places to shop.
A Heavenly Wedding - Courtesy Wedding Loans
You always dreamt of walking down the aisle in style. Marriage for you meant including all pomp and show.
Information About Debt Consolidation Loans with Bad Credit
Finding debt consolidation loans with bad credit can be quite a task? after all, a lot of lenders don't want to take a risk on someone who is such an obvious credit risk. Luckily, however, a lot of lenders will take that risk; it's simply a matter of knowing what they're looking for, and how best to approach them for a loan.
Understanding Personal Loans, Cash Advances and Payday Loans
Have you ever been short on cash? Has an unforeseen event emptied out your wallet? Are you short on funds in-between paychecks? I am sure that many of you have found yourselves in this situation before. Don't want to borrow money from a friend or family member because you don't want them knowing your business? Now you don't have too.
Secured Loans vs. Unsecured Loans - Choosing Between the Two Diverse Ends
Often in our search for finance options, we are led into a crossroad where we have to make a choice between secured and unsecured loans. Both are equally alluring and put the borrower in a difficult spot.
|home | site map|
|TIGER MEDIA© 2006|