SBA loans support small businesses by offering them affordable and flexible funds for their business. They are government-backed, and they, therefore, provide favorable borrowing terms, compared to the traditional financial institutions. Usually, SBA loans help entrepreneurs to purchase business equipment, expand their business, increase their working capital, or refinance their existing debts. The loans, however, come in different types. If you own a small business and you would like to enjoy the benefits of an SBA loan, keep reading to know more about the types of SBA loans available.

The Three Types of SBA Loans

1. SBA 7(a) loans

SBA 7(a) loans are the most popular types of SBA loans. They are highly flexible, and they offer great terms. These types of loans are further subdivided into other types of loans, such as:

  • The standard 7 (a) loans- standard 7 (a) loans allow borrowers to borrow up to a maximum of $5 million. The repayment period ranges between 1 and 25 years, depending on how the borrower sues the cash.
  • SBA express loans- the approval period for the SBA express loans is quite lengthy, as it takes a minimum of thirty days. The maximum credit amount of these loans is $350,000.
  • Community advantage loans- these loans are explicitly designed for people with low income, minorities, and women who do not qualify for conventional banks. The maximum loan amount is $250,000.

2. 504 (a) Loans

These loans help entrepreneurs to finance their business. They are the best option for you if you need to purchase new business assets, improve an existing piece of land, or renovate a building. The repayment period ranges from 10 to 20 years, and the maximum amount you can get is $5 million.

3. Microloan SBA Loans

As the name implies, microloans are usually smaller, with a maximum loan amount of $50,000. The lending rates are relatively cheaper, and they range between 8 to 13 %.

How to Choose the Best SBA Loan

You should consider the usage, the interest rates, and the requirements of the loans when choosing the best SBA loan. Ideally, SBA 7 (a) loans are ideal for refinancing debts, purchasing equipment, or purchasing an already existing business. You can also use the loan as working capital. The microloans are suitable for small business needs, while 504 (a) loans are good for big business purchases.

SBA loans are ideal for both startups and the most established business. Review the terms and conditions for each loan so that you can choose the best for your business.