Business Loan Calculator
Summary
| Monthly Payment: | $0.00 |
| Total Interest: | $0.00 |
Business loans, like the name implies, are loans intended for business purposes. Like other loans, the terms require the borrower to pay back both the principal and the interest. Most business loans will require monthly repayments, though some may call for weekly, daily, or interest-only payments. A select few can require repayment when the loans mature.
Business loans also come in many different forms. The following is a list of common loan options for U.S. businesses:
SBA Loans
Small Business Administration (SBA) loans, or loans federally regulated by the U.S. Small Business Administration, are designed to meet the financing needs of many different business types. Depending on the type of SBA loan, borrowers can use them for various purposes, including:
- Business start-ups
- Acquisitions
- Working capital
- Real estate
- Franchise financing
- Debt refinancing
- Improvements
- Renovations
The actual SBA loan funds are not provided by the government, but by banks, local community organizations, or other financial institutions. The SBA guarantees these lenders 75% to 90% of the loan amount in case of default. This encourages loans by reducing lender risk. However, SBA loans require additional paperwork and extra fees. Moreover, approval may take longer, and their strict regulations tend to give business owners less freedom. Additionally, maximum loan limits may fall short of covering the more costly needs of some businesses.
SBA Loan Types
The SBA offers four types of small business loans:
7(a) Loan
This is the primary small business loan offered by the SBA, and it is usually what one means when referring to an “SBA loan.”
7(a) loans make up more than 75% of all SBA loans, and borrowers utilize them for varied purposes. These may include working capital or different types of purchases. Such acquisitions may consist of machinery, equipment, land, or new buildings. Borrowers can also use the funds for debt financing. They may take out loans as large as $5 million for up to 10 years for working capital or 25 years for fixed assets.
Microloan
These loans are intended for new or growing small businesses. Borrowers can utilize microloans for everything covered under 7(a) loans except paying off existing debt or purchasing real estate. Lenders can approve microloans for as much as $50,000, though the average of these loans is no more than $15,000. The maximum allowable term is six years.
Real Estate & Equipment Loan (CDC/504)
Borrowers typically take out CDC/504 Loans for long-term fixed-rate financing of real estate or equipment and debt refinancing. Due to their limited scope, they cannot utilize these loans for working capital or inventory. The maximum loan amount is $5.5 million with possible terms of 10, 20, or 25 years.
Disaster Loan
Business owners can use these loans to repair machinery, property, equipment, inventory, or business assets damaged or destroyed by a declared disaster. The maximum loan amount is $2 million, and possible disasters can include earthquakes, storms, flooding, fires (natural or man-made), or civil unrest.