SBA Loans: What They Are, the Types Available and How They Can Benefit Large Companies
[Have you ever wondered where you can get SBA loans from a loan agency in Bexley, OH? Look at the types and benefits of SBA loans offered by Heritage Financing.]
As a business owner, there is a chance that you have considered a variety of credit and funding options, at some point. Maybe you are wondering if there is a finance company near you or a loan agency in Bexley, OH, that can help you either start a business or solve an immediate problem.
Of all the loans available for large companies, SBA loans are among the excellent ways of financing your business. There are a host of companies that have benefited and continue to enjoy what SBA loans offer.
From startup to commercial real estate loans, SBA loans offer competitive solutions. Large companies, at times, need large sums of money that traditional banks and lenders may take longer to process and you can easily be turned down. Let’s see what they are, types, and what are the benefits of SBA loans that give them an edge?
SBA Loans Facts
SBA loans differ from other types of loans in that the borrower and the lender go through an SBA agency. In other words, Small Business Administration (SBA) loan programs are written in agreement between SBA agencies and lenders.
The whole idea is that the lender doesn’t give money to you directly but to the SBA agency. You get to use the program to look for lenders. The SBA loan allows the lender to be more flexible and charge low-interest rates because the SBA loan agency guarantees part of the loan.
Different Types of SBA Loans Accessible to Large Companies
There are many types of SBA loans that are available for your business, and you should take full advantage of them. The tricky part is choosing which one is best for your current needs. For your benefit, here are a few types that can help you filter through and see which one’s best for you:
- SBA 7(a) Loans
The SBA 7(a) loan is the most popular loan that is available for businesses which can offer you a minimum of $30,000 to a maximum of $5 million. If you qualify for this loan, you can use it to purchase equipment, fund startup costs, buy new land, acquire a new business, expand your existing business, and many more.
You will need to put some collateral to secure the financing. Most loans will not go beyond ten years in terms of repayment. Only in the case of commercial real estate loans can the repayment period extend to 25 years. Expect interest rates of 5-10 per cent.
- SBA CAPLines
In this category, the SBA offers you working capital loans if you need to meet seasonal financial obligations or if you required to resolve short-term cash flow issues.
You can get up to $5 million and a maximum repayment period of 10 years. It is an excellent choice for you if you are looking to meet recurring operational costs and resolve unforeseen expenses.
Currently, there are four types of CAPLine programs:
- Contract CAPLine funds are appropriate for contractors who want to finance specific contracts. It is not used to buy assets, finance debts, pay taxes or as working capital loans.
- Builder’s CAPLine funds are used to finance renovation and construction projects.
- Season CAPLine funds are excellent if you need to offset high receivables or pay for inventory during peak seasons of the year.
- Working Capital CAPLine funds is used in case you need to resolve short-term working capital needs.
The interest rates of these loans will range from 7.25-9.25 per cent.
- SBA 504 Loans
The 504 loan program is appropriate for you if you need to acquire some fix assets and a long-term loan to finance the need. If you need to buy heavy equipment or buildings or even property, this program is an excellent choice.
If you qualify and the loan is approved, you can receive up to $5 million. You will need to guarantee at least 20% of the 504 loans.
Benefits of SBA Loans
Regardless of which type of loan you choose, here are some of the benefits of SBA loans:
- They have secured loans where the SBA agencies guarantee a certain percentage of the loan to the lender, therefore reducing the risk.
- There are several uses for the funds, which means you can find a loan that can suit your needs.
- There are happier lenders which means that there are many people who would be willing to offer financing at lower rates.
- Lengthy repayment periods gives you time to repay and grow.
- Less down payment requirements are making the loans more accessible.
SBA loans are an excellent choice for acquiring financing. If you need more information feel free to contact Heritage Financing, our loan agency in Bexley, OH.