SBA Loans Are Here to Stay: Recognize Your Alternatives

SBA loans have helped small businesses all across the country stay in business and remain open during the COVID-19 pandemic. SBA loans are here to stay, meaning you can apply and qualify for an SBA loan today. SBA loans are a great alternative to traditional loans. As an SBA CDC in Virginia and North Carolina, 504 Capital is here to explain the different types, benefits, and limitations of SBA loans.

What are SBA Loans?

SBA loans are small business loans that are given by certified development companies and backed by the government’s small business association. These loans can be used by small businesses looking to purchase fixed assets or establish operating capital. Even now, during the COVID-19 pandemic, SBA loans have helped many small businesses stay afloat and remain open.

Different Types of SBA Loans

There are three different types of SBA loans that small businesses can apply for. There are 7(a) loans, 504 loans, and microloans.

SBA 7(a) loan amounts can reach up to $5 million and are the best option for small businesses looking to purchase real estate. You can also use this loan to create working capital, purchase furniture, supplies, etc., or refinance your current business debt.

SBA 504 loan amounts can reach up to $5 million and are fixed-rate, long-term loans. This loan type is more limited and only allows purchases that promote business growth or job creation.

SBA microloans provide loans up to $50,000 through funded intermediaries. These loans are often used for the startup and expansion of small businesses. They are ideal for small businesses looking for loans under $50,000.



Why are SBA Loans a Good Alternative to Other Loans?

SBA-guaranteed loans are oftentimes better than a typical loan. This is because SBA-guaranteed loans usually offer lower interest rates, lower fees, low down payments, flexible overhead, and continued support. These benefits differ depending on the type of SBA loan you apply for, but overall an SBA loan is typically a good alternative to a traditional loan.

What are the Qualifications?

Because SBA loans are backed by the government, qualifications for these loans are often much easier to meet than other types of loans. In most cases, there are 4 main requirements that a business must meet in order to qualify. They must:
  • Be a for-profit business
  • Be located in the USA
  • Have invested equity
  • Exhausted other financing options

What are the Limitations?

If you are able to qualify for an SBA loan, you will have certain limitations on what you can do with the loan amount, depending on the loan you apply for. For example, if you are looking to establish long-term or short-term working capital for your business, you will need to apply for a 7(a) loan. Restrictions on a 504 loan don’t allow you to use the loan amount for working capital. Make sure that you are paying attention to the limitations prior to applying.

504 Capital—SBA lender in Virginia and North Carolina

SBA loans are not given out directly by the Small Business Administration. Instead, they are given out by certified distribution companies. If you are looking to apply for an SBA 504 loan in Virginia or North Carolina, 504 Capital is the place for you. 504 Capital is a certified SBA lender in Virginia and a certified SBA lender in North Carolina.

We have helped hundreds of small businesses apply and receive an SBA 504 loan. Let us help you! Visit our website or call us (757) 623-2691, to see how you can qualify for an SBA 504 loan today!
Location: 501 Independence Pkwy # 330, Chesapeake, VA 23320, USA

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