3 Business Loans from the Government

The SBA (Small Business Administration) is the main resource for business loans from the government. New startups and established businesses can apply for SBA loans, but there are different programs for different business needs. Here are the basics about the different types of SBA loans: 

SBA 7(a) Loans 

SBA 7(a) loans are best for the business owners who have a good credit score and need finance for the long term period. The term for SBA 7 (a) loans may range from 10-25 years depending on for which purpose you’re using your funds. The interest rate for SBA 7(a) loan may vary from 7-9.5%. 7% to 9.5 %, depending on tenure. 


Skip If: 

  • You need short-term financing. 



SBA 504/CDC Loans 


This loan is perfect for the business owners who need to invest in real estate or to buy the equipment necessary for their businesses. 

In SBA 504/ CDC loans, a portion of the loan comes from a bank, and a portion comes from an SBA-approved community lender called a certified development company (CDC). SBA 504 loan term ranges from 10 to 25-year loans, with interest rates even lower than 7(a) loans. The interest rates are so low because the asset that you’re purchasing with the loan proceeds serves as collateral. 


Skip If: 

  • You’re not purchasing capital assets like real estate or equipment. 

SBA Microloans 


Microloans are good for the startups and microbusinesses who require less than $50,000 in the capital. It can be a good option for people who are planning to launch their startups. 

The SBA partners with community-based nonprofit lenders to make these loans. The maximum term on SBA microloans is six years. The interest rates are typically the highest around 9% to 16%. 


Skip If: 

  • You need more than $50,000 in the capital. 

Need more information about SBA loans, you can contact Stillwater Minnesota Banks. 

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