Everyone in the market at present is aware that small businesses are in need of working capital and business loans to finance their important business activities and growth. It is evident that the largest driving factor of the US economy and the small business segment has been US and international deleveraging process.
Federal and local governmental bodies are attenuating in size and space. Traditional lenders; i.e., banks and other financial institutions due to losses at some point during the financial crisis are decreasing their balance sheets and ability to offer funding to small businesses.
Despite the 0% interest policy of the Federal Reserve, equity and debt capital are quite hard to acquire and find for small businesses. The Small Business Administration (SBA) is an active contributor in offering debt and small business funding to small businesses in US under some programs and guidelines.
As a small business owner, you may have some issues in getting the financing from traditional sources. SBA works with small business owners to appropriately identify, examine and structure financial requirements that are unique to small businesses. The below listed small business funding programs allow you to develop, expand or sustain your small business.
Flexible Term Lending Program
Loans under flexible term lending program can range from $50,000 to $5 million with almost 7-25 years terms, based on the use of proceeds. These loans are structured without the balloon payments with variable interest rates, which is normally up to 2.75% over prime. This small business funding program is good for most of the industries like manufacturing, wholesaling, retailing and construction to name a few.
To make the grade for this type of small business funding, your small business must be operated for profit, be located in the US and have to be owned by a US citizen or resident alien. As the small business owner, you have to prove the repayment potential that you have from earnings and the funding cannot be involved in investing in real estate, politics and religion.
Fixed/Floating Rate Program
This sort of small business funding program is structured so that there are no balloon payments, with fixed interest rates based on current market rates. The term of the small business loan is based on use of proceeds. To be eligible for this type of business funding, your small business should be operated for profit, located in the US and should be owned by a US native or resident alien.
The fund usage restrictions are the same as with flexible term lending program, you have to show your repayment potential from income. The funds cannot be used in making an investment in real estate, religion, or politics.
Conventional Real Estate Loan Program
This type of small business funding program is a financing tool that will let you acquire commercial real estate. You may use the cash from these loans to purchase, renovate, expand or refinance commercial real estate.
With this type of funding program, you will be able to get a loan of as much as $5 million with terms up to almost 30 years. There are both fixed and variable rates and multiple prepayment options.