Loan Types
The U.S. Small Business Administration offers several different types of loans to small businesses including:
- 7(a) Loan Guaranty Program - This program is designed to stimulate small business activity and promote small business' contribution to economic growth. It is designed to reduce the risk to banks in making loans and thereby increase the availability of short-term capital for small businesses.
- Uses: Land, buildings, equipment, expansions, renovations, and/or working capital.
- Term: Loan guarantees up to 75% of a bank loan under $100,000
- LowDoc - A low documentation loan guaranty program for business loans of $150,000 or less. This program is designed to reduce the paperwork involved in the SBA loan programs for smaller loan requests. LowDoc simplifies the application process and provides a rapid response from SBA - usually only two or three days. LowDoc focuses on character, credit, and experience.
- Uses: Working capital and equipment
- Terms: All loans are to be adequately secured, but loans generally are not declined where inadequate collateral is the only unfavorable factor.
- Prequalification Loan Program - The Prequalification Loan Program is designed to assist the borrower with the preparation of the loan prequalification and application process by providing an intermediary such as the Small Business Development Center to help prepare business plans and complete a prequalification loan application package.
- Term: Loan guarantees up to 75% of a bank loan under $100,000
- CDC/504 Loan Program - The objective of the 504 Program is to achieve community economic development through job creation and retention by providing long-term fixed asset financing to small business concerns.
- Uses: As a general rule, Certified Development Companies consider only profitable, healthy, expanding businesses. Projects can range in size from $50,000 to $1 million. The program is not intended to assist ailing businesses.
- SBAExpress - The SBAExpress loan was designed to make it easier and faster for lenders to provide small business loans by allowing the lenders to use their own forms and allows lenders to take advantage of electronic loan processing. The program also provides a rapid response from the SBA - within 36 hours of receiving your complete applications.
- Terms: Loans up to $150,000
- CAPline Seasonal Line of Credit - The CAPline Seasonal Program offers short-term, guaranteed loans to help small businesses get past cash crunches attributable to seasonal changes in business volume. Potential borrowers must have established a definite pattern of seasonal activity.
- Uses: Loans may be used for working capital, fixed assets, receivables, and inventory required from seasonal upswings in business.
- Term: Businesses must have been in operation continuously for one year immediately preceding the application date.