Small business loans are often the answer if you’re looking to start or grow your business. You probably already have ideas about what a business loan is. You might be thinking that you have to go to a bank to get one, you have to be a perfect candidate to get accepted, and you have to be in one of a few select industries. Those factors may be important for some types of loan, but the reality is that there are loan types out there for a wide range of businesses and financial situations.
Regardless of what you plan to use a loan for, you can’t make an informed decision if you don’t know all the options! Here are four types of business loans you may never have even heard of—and one of them might just be the perfect fit for your business and needs.
SBA 504
The Small Business Administration’s SBA 504 loan is specifically for major fixed-asset project purchases, and offers long-term, fixed-rate financing in combination with a bank loan. Funding up to 90% of the total project costs, it’s typically made up of bank funding of 50%, SBA 504 lender funding of 40%, and the borrower’s down payment of 10%.
The SBA 504 refinance option allows you to refinance existing commercial real estate and fixed-asset debt at below-market rates. And if you need working capital? You can cash out up to 20% of the property value as part of the program.
Who it’s for: Businesses of all shapes and sizes looking to purchase owner-occupied commercial real estate or another major fixed asset.
What you can use it for: Purchasing fixed assets like buildings, land, business construction, heavy equipment, or machinery. It can also be used for refinancing existing fixed-asset debt.
SBA Microloan
Microloans are, as the name suggests, for borrowing lower amounts—up to $50,000. They also offer lower interest rates and fees, a faster application process, and have a term of six years.
Who it’s for: Businesses looking specifically for a lower loan amount to fund shorter-term needs.
What you can use it for: Most business financing needs, from refinancing existing debt to technology upgrades. Because of the typically lower amounts and lower interest rates, microloans are ideal for short-term, immediate working capital needs such as buying equipment or leasehold improvements.
SmartLoan
Most businesses are familiar with online business loans–and many may even have taken out one with a high interest rate and high monthly payment. However, as a mission-based lender, Pursuit offers an affordable version of these fast, convenient loans–the SmartLoan. Exclusively offered by Pursuit, they are a flexible and affordable loan up to $100,000 with a fixed interest rate. An alternative to predatory online loans, they offer businesses a more affordable, responsible way to borrow. They have a five year term with a 10 year amortization, meaning your payments will be structured as if they’re spread out over 10 years in order to keep your monthly payments low.
Who it’s for: Requirements for taking out a SmartLoan include a personal credit score of 640 or higher, a positive or break-even cash flow, and annual revenue of over $120,000. (Note: a SmartLoan isn’t suitable for startups, as the business needs to have been in business for two or more years.)
What you can use it for: Almost every business financing need, particularly immediate needs (thanks to the rapid time to funding once approved) such as covering initial project costs, urgent inventory restocks, or leasehold improvements, and refinancing high-cost debt.
SBA 7(a)/Community Advantage
You may be wondering what the 7(a), the SBA’s most popular program, is doing in a list of business loans you’ve probably never heard of. While you probably already know about SBA 7(a) loans, what you might not know is how differently it works at Pursuit. Along with SBA Community Advantage loans, the 7(a) is ideal for businesses that don’t necessarily meet all of the requirements for a traditional bank loan. The details and requirements are generally the same for both loan types.
Who it’s for: SBA 7(a) loans are aimed at startups or businesses in specific industries such as the restaurant industry and retail, and Community Advantage loans are a type of 7(a) for businesses in underserved areas. Even if you don’t think you’d be eligible for a bank loan based on your circumstances, you may still qualify for a 7(a) or Community Advantage loan. For this type of loan, if you have a positive historic or projected cash flow, positive net worth, potential collateral in the form of assets or real estate, or a fair to good personal credit score, you’re a good candidate for qualification.
What you can use it for: Almost any business need including working capital, business acquisition, equipment or inventory purchasing, and the purchase of commercial real estate.
These are just a selection of the small business funding options available to you. At Pursuit, you can also find a variety of other loans to serve your unique needs, such as loans for particular demographics (women, minorities, and veterans), loans for special uses, and more.
If you’re looking for a small business loan to help your business grow, you have a number of different options. If you’re ready to find out more and select the right loan for your unique needs, Pursuit is here to help.
