Types of Business Loans Offered by the Small Business Administration

The Small Business Administration (SBA) is a government run organization designed to help small business in all stages of a business’ life cycle. One of the most crucial stages in any business, and one in which the SBA can be especially helpful, is in the financing stage.

Types of Business Loans Offered by the Small Business Administration The SBA offers several different kinds of loans to businesses, ranging from traditional loans to disaster loans. This post will briefly cover three common types of SBA loans. To gain a more thorough understanding, and to discuss what loan may be best for your business, contact The Gierach Law Firm to schedule a free initial consultation.

 Keep in mind that each of these loans are business loans, meaning that there must be a properly registered organization. An experienced business law attorney can provide assistance in registering your business or advice about which form your business should take.

 General Small Business Loans: Commonly referred to as a 7(a) loan, these loans are the basic SBA loan. The repayment term of the loan depends on the collateral offered, but it can be as long as 25 years in some cases. The SBA requires that the loan be fully collateralized, meaning that sufficient collateral be offered to cover the amount of the loan. However, if a business owner does not have sufficient assets, and has pledged all available assets, the SBA will not deny the loan on this basis alone.

 Microloans: Microloans are smaller, short-term loans that cannot exceed $50,000. The average amount of a microloan is about $13,000. Like the traditional 7(a) loan, a microloan must be collateralized by pledging sufficient assets. Repayment terms, interest rates, and fee can all vary but depend on the size and purpose of the loan, among other things.

 Disaster Loans: The SBA offers disaster loans to businesses and individuals who suffered damage to real estate, personal property, machinery and equipment, or inventory and business assets. The rates on disaster loans are lower than for other SBA loans.

 Planning on Financing a Business?

 If you are planning on financing a business through an SBA loan or any other available means, you should consult with an experienced Illinois business attorney before deciding what avenue to take. With the assistance of an attorney you can rest assured that you have an experienced set of eyes look over your situation and provide advice with how to proceed.