3 Popular SBA Loans: What You Need to Know

Funding your small business or startup raises the lifelong question, how do I do it? Whether you’re in your first year operations or reaching a long-sought after landmark of one, three, five years or more, you’ll still need to continue funding your operations. While retained earnings drive your business to profits, everything from expanding your company to buying new property and technology to handle that growth, loans are one of the most commonly used ways to fund small-business projects.

How to Fund Your Small Business with Three SBA Loans

Small, or Micro Loans

When it comes to borrowing a small amount of money up to $35,000 (this is considered a relatively small amount of money compared to other larger business loans) many people find the 7(m) Microloan program to suit them best.

While the loan itself is currently being quite heatedly debated due to its direct sourcing from the SBA, this loan is perfect for startups. The funds, which max out at $35,000, can be used for pretty much any expense, keeping the loan easy-to-use with little restriction.

However, this loan requires its borrowers to enroll in financial responsibility classes that some find useful while others find to be a waste of their already-strained time as small-business owners. Regardless, this loan has a lot to offer its borrowers with relatively little cramping regulations.

Larger Loan Programs

Unlike the 7(m) Microloan program, programs such as the 7(a) or 504 Loan programs offer much larger amounts of money to companies. These loans can be borrowed in amounts between $250,000 and $1 million offered through subcontracted lenders to reduce the risk of the SBA’s offer to borrowers.

The 7(a) loan is actually one of the most popular loan programs offered, and is offered in many different forms to fit the needs of the borrower. Meanwhile, the 504 program allows small business owners the opportunity to borrow up to $1 million for new assets such as land and equipment. However, this loan is more difficult for many service companies to acquire.

Each of these loans have much more regulated spending and qualification requirements alongside a significant portion of borrower-responsibility when backing the loan.

For more information about small business loans, visit the US Small Business Administration's website. Or, drop us a line with your questions to see how Team VAST can help you decide which loan is best for you.