There are several aspects that you need to know before thinking of applying for government small business loans. A long list of requirements is waiting for you that could make you back out for a split second. But if you really want to push through with the idea and sure that you are in perfect shape to follow the rules, then, cut the crap and go for it!
Small business loans are ideal if there is a good plan that can make you generate income out of it. Otherwise, you should not be able to repay the borrowed money which may lead you and your business on the red.
Here are some pointers that can help ensure you are travelling in the right direction:
You must know what you need the loan funds for – Applying for a loan has to have a reason and it has to be for something that can make you earn income from.
There should be a target amount – Lenders would ask you how much you need to finance a venture. This is where they take a look at how much you earn.
Know when you need it – How soon you need the money is an important aspect when looking for additional funds so prepare to answer this question.
Know when you can pay it back – There has to be a date when you can be able to pay back the loan you applied for to make it known that you are sincere on paying back.
Be sure you know where your business status stands – A business that is flagged for debts may not qualify for quick government small business loans. Be sure that you are in good standing where credit ratings are concerned.
Be ready for a collateral – There are some limitations to granting loans and this may involve you to submit collateral to help secure one. It could be a property, an existing bank account, or any other means that are of high value in the eyes of the lender.
Forms of Government SBA Loan Programs
General Small Business Loans
These are loans that involve financial aid for businesses having special requirements based on aspects specific to the business and its principals. This includes acquisition, expansion, or operation of existing businesses.
This program provides loans from $13,000 to a maximum of $50,000 for small businesses and some startup or expanding non-profit childcare centers. Intermediaries require a certain collateral or personal guarantee from the business owner. This may be used for supplies or inventory, working capital, or purchase of furniture and fixtures, as well as machinery equipment.
Real Estate & Equipment Loans: CDC/504
Also referred to as CDC/504, this type finances major fixed assets like real estate or equipment. To qualify, a business has to be a for profit company, has a net worth below $15 million. The funds are meant for financing fixed assets or equipment, constructing or renovation of facilities and not for speculating or investing in real estate rentals. It requires a highly feasible business plan to start with.
This is a low-interest loan for all sizes of businesses, homeowners, renters, and private non-profit organizations to be used for repair or replacement of damaged or destroyed items such as inventory, real estate, business assets, personal property, machinery and/or equipment in particularly declared disaster areas.
Are you looking for ways to finance your new business venture? Learn how to get government small business loans by visiting our site.