Types of Small Business Loans
Several factors will determine the best loan strategy for your company. When working with an Ion Bank commercial loan officer, you may be asked about:
- The amount of money needed
- What you need it for
- How soon you need it
- How quickly you’ll be able to pay the loan back
- How long you’ve been in business and the current state of your company's finances
- The type of collateral available
With these points in mind, you could be directed to one of the following types of small business loans:
Small Business Administration (SBA) Loans
These loans are guaranteed by the United States Government and are designed to meet the needs of a range of businesses. While the government doesn’t directly lend your company the money, the SBA sets a series of guidelines for its lending partners, such as banks. SBA loans may apply in cases where the Bank determines a higher risk – such as a start- up business or a business that may fall short with collateral. The SBA guarantees a percentage of the loan amount, in the event of a default.
Ion Bank may offer you one of the following options SBA loan options:
- 7(a) Loan Program: Considered the “primary” SBA loan, this program has the greatest flexibility. With a 10- to 25-year term and a $5 million limit, it may be used to purchase land or a building, for construction and renovations, to get your business off the ground, to expand your company, to assist with debt refinancing or with acquisitions.
- Microloans: As the name implies, microloans are very small lending solutions designed specifically for growing your business. As a result, they may be used for working capital and purchasing inventory, supplies, furniture, machinery or equipment.
- CDC/504 Loan Program: A real estate and equipment loan, this solution offers long-term fixed-rate financing for major assets acquisition.
- Disaster loans: This low-interest loan assists with repairing or replacing real estate, machinery and equipment damaged or destroyed by a natural disaster.
These programs come in a similar assortment, but don’t have such strict terms. Because a government agency isn’t involved, approval tends to be quicker and you can secure a lower interest rate. However, be aware that approval is usually more stringent and you’ll have a shorter repayment period.
In qualifying for a conventional business loan, you may be able to receive one of the following:
- Working Capital Loans: A short-term solution, specifically to help pay for operational costs like wages and supplies.
- Equipment Loans: A program allowing businesses to make monthly payments on equipment.
- Lines of Credit: For day-to-day cash flow needs, this loan requires no collateral and has a take-what-you-need approach. You only pay interest on the amount you use.
- Professional Practice Loans: Geared toward professional services, these programs assist with buying real estate, renovating office space, buying new equipment and refinancing debt.
- Term Loans: With this program, a business borrows a certain amount of money and then repays the loan over a specific term.
A business loan may be the right step to take your company to the next level. To explore your financing options, stop by one of our locations today.
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