Small business can be defined as, “A designation for certain statutory purposes referring to a firm, corporation or establishment having a small number of employees, low volume of sales, small amount of assets or limited impact on the market.”
Every business whether big or small, has its own capacities, size, requirements, but the most important thing required for its existence is finance, which is needed at each and every level. In order to fulfillment the need of finance, loans are there. The loans demand by small business firms are known as ‘small business loans’.
Small business loans can be used for various business purposes including for purchasing real estate to house the business; for construction, renovation or leasehold improvements; to purchase furniture, fixtures, machinery, or equipment; for the flooring of inventory and for working capital or many other purposes that act as a part of small business.
There are various types of small business loans available in the market. A businessman can apply any of them, and raise funds to meet up business requirements.
- The first option is micro loan thru which a businessman can borrow up to $5,000 to $35,000 for any business purpose. Another option is SBA Loan from private-sector loaners (banks, etc.). Such loans are guaranteed by the SBA. The SBA has no funds for direct lending.
- Working capital or operating loans are essential to meet up day-to-day expenses. The working capital loans come under two different categories - secured working capital loan and unsecured working capital loan.
- A term loan is meant for financing long-term assets. A small business owner can also apply for SBA loan that is offered by private-sector banks and guaranteed by the SBA. A person will obtain up to $25,000 for a period of 6 years.
Through local financial progress groups, the small business owner will get 504 SBA loans. A LowDoc loan is an easy way to obtain funds for business. It requires less paper work and its processing is also very fast. A person can apply for up to $100,000. Other loans include commercial real estate loans, equipment loans for professionals, international trade loans, merchant cash advance and pollution control loans.