SBA Financing Options to Increase Working Capital
If you are a small business owner, there will probably come a time when you are faced with the need to secure funding for the purchase of equipment or real estate, or some other reason which will help your business grow. When other sources of funding are not available to you, a good place to turn is to the Small Business Administration within the federal government. Here are some of the loan types offered by the SBA.
SBA export loan
These kinds of loans are offered for the purpose of helping small businesses establish startup export operations, and to help with cash flow. This in turn, should help a small business provide more favorable terms to their customers abroad.
CDC/SBA 504 loans
This kind of loan puts together a normal bank loan with a second loan from a non-profit Community Development Corporation in a single low-interest loan which can be in amounts up to $20 million. It is only made available for purchasing heavy equipment or commercial real estate.
SBA CAP lines of credit
The purpose of this type of loan is to help a small business manage seasonal working capital needs, or other short-term funding needs. There are actually five different types of these lines of credit, and they basically follow the same terms as an SBA 7(a) loan.
SBA 7(a) loans
This is by far the most popular kind of loan offered by the SBA, and it can be for any amount up to $5 million. Small business owners applying for this kind of loan must use the proceeds for the purchase of another business, real estate, working revenue, debt refinancing, or for the purchase of equipment.
SBA micro loans
These loans are offered for short-term needs, in amounts up to $50,000. They carry interest rates which are higher than other SBA loans, and are made available through non-profit community organizations.
SBA Disaster loans
These loans are offered to businesses which have suffered losses as a result of a declared disaster, and funding must be used for the purpose of recovery from any losses sustained.