3 Ways SBA Loans Support Small Companies

Small businesses wind up at a disadvantage when applying for financing from big banks and other institutional lenders simply because of their small financial footprints. This disadvantage is not intentional, it’s just the result of conservative lenders using actuarial tables meant to minimize their own risks without regard for the larger financial implications in the local economy. That’s where the Small Business Administration steps in to balance the scales, offering a variety of SBA loans that are designed to help companies grow until they are large enough to command the interest of those lenders on their own. Each loan program targets a specific small business need, and together they provide broad spectrum support for practically any business model.

Microloans To Jump Start Operations

Many business owners looking to scale a side hustle or hobby venture into a full-time business lack only the funds needed to take on larger projects that would consume a person’s entire schedule. That is where microloans come in handy. These small sum loans top out at $50,000, but they do not always require collateral. Unlike most other SBA loan programs, microloans can use either collateral or guarantees from co-signers to provide working capital for any business need.

Even if your business is up and running, a microloan for working capital can make a huge difference when you have upcoming opportunities but you do not have a lot of cash on hand. Keep them in mind when you need capital and other SBA loans do not fit the bill.

7a Loans To Buy Business Facilities

Leasing facilities can be advantageous to the right company, but for many businesses it represents a lost opportunity to invest in real assets. Owning your own operational facilities allows you to use the equity in them when you need financing for other projects while also lowering your company’s overhead in the long term. The 7a program is designed to support those goals by providing the funds you need to close the sale when you have at least 20% down and the income to support the payments. Over the past few decades, it has provided thousands of companies with the opportunity to invest in their own futures.

504 Loans for Asset Purchases

The 504 loan program is probably the most well-known because it provides support for so many types of companies. The loans have higher maximum values than with other SBA loans, and they can be used to purchase a variety of assets together. The best part is that they cover not only equipment and properties, but also franchise license fees for whitelisted companies. That makes it easy for small companies to get the support they need for viable businesses even if they do not plan to scale up operations.