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For someone who wants to start their own small business, small business loans can make all the difference in the world. Small business loans are done with the help of the Small Business Association (SBA), who make loans directly to the business or act as a guarantor on bank loans. There are several different types of small business loans that fit different situations.
- Micro loans are made for anywhere from $5,000 to $35,000 and can be used for anything needed to get a business going. The money is provided to lenders in the business owner’s community by the SBA. These lenders than lend the money to the business owner at no profit to them. In order to get these loans, borrowers must meet certain requirements in training and business planning.
- SBA loans are loans that are backed by the government and can help a small business owner who might not otherwise qualify for a loan. While the SBA helps the business owner get the loan, the money actually comes from commercial banks.
- Franchise financing involves getting a loan to purchase a franchise of an existing business. The source of the loan can be an SBA-backed private bank, commercial lenders, or the franchisor itself. No matter where the money comes from, the borrower may be required to pay 15 to 30 percent of the amount needed.
- Development financing is long-term financing at a fixed-rate to purchase major assets like land or buildings required to start a small business.
- Import export loans are for business owners who are exporters.
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