Government Loans
Government-Backed Commercial Loans
Government-backed commercial loans are supported by federal agencies to reduce risk for lenders and make it easier for businesses to access capital.
Programs
- SBA 7(a) loans: Flexible funding that can be used for working capital, equipment, or real estate, with a maximum loan amount of $5 million.
- SBA 504 loans: Long-term, fixed-rate financing for major assets such as buildings or machinery. These loans are offered through Certified Development Companies (CDCs).
- SBA microloans: Smaller loans of up to $50,000, often used by startups, small businesses, or nonprofit childcare centers.
Benefits
- Competitive interest rates compared to many traditional loans.
- Lower down payment requirements for qualified borrowers.
- Flexible repayment terms suited to business needs.
- Some programs do not require collateral.
Other Government Loan Options
Standard Commercial Loans
Unlike SBA-backed options, standard commercial loans are provided directly by banks or other financial institutions without government support.
- Can be used for capital expenditures, operating costs, or commercial real estate.
- Often require collateral such as property or equipment.
- Approval depends heavily on strong financial history and creditworthiness.
- May be structured as short-term loans or renewable credit lines, such as those used for seasonal funding needs.
SBA Loan Guarantees
The SBA does not typically lend money directly, except in disaster recovery cases. Instead, it guarantees a portion of the loan—anywhere from 50% to 90%—which encourages lenders to approve funding for businesses that might otherwise be considered too risky.