If your small business is in need of financing, it’s worthwhile to consider whether it qualifies for an SBA loan. Strictly speaking, the Small Business Administration does not loan money. It guarantees loans that other financial institutions make. SBA loans generally offer low interest rates, small down payments, and reasonable repayment terms. Here are the various loan programs available through the SBA.

Basic SBA 7(a) Loans

The SBA’s primary loan program provides financing to small businesses that might not otherwise qualify for loans through traditional means. Your small business may be eligible for a 7(a) loan if it’s for-profit, has owner equity, operates within the United States, and does not have alternate means of funding. These SBA loans have maturity periods of 10 to 25 years and can be used for a range of purposes, including working capital, purchasing and improving property, and acquiring equipment and machinery.

SBA 504 Loans

Apply for an SBA 504 loan if your company needs funds specifically for property, machinery, or equipment for modernization or expansion. To be eligible, your company must be for-profit, have a net worth of less than $7.5 million, and have an annual post-tax income of less than $2.5 million for the past two years.

SBA 7(m) Micro Loans

The SBA 7(m) micro loan program offers up to $35,000 in short term non-guaranteed loans to small businesses and childcare centers. These loans may be used for equipment, furniture, inventory, working capital, and other needs, but they are not to be used for purchasing real estate or paying debts.

SBA Loan Pre-qualification Program

If you need help preparing your SBA loan application, apply for the loan pre-qualification program. An intermediary assigned by the SBA works with you to strengthen your application, focusing on your credit, character, business history, and specific terms of the loan for which you are applying.

For more advice on SBA loans and other types of business financing, contact Span Capital.