start up business loans

A Complete Guide to Start Up Business Loans

start up business loansAre you starting a new business or expanding your current one? Are you thinking about purchasing an existing business?

If you answered yes to any of these questions, you’re not alone. There are over 28 million small businesses in the US, with 543,000 new ones formed every month.

How can you ensure your small business will be a success? One important factor is to have enough capital on hand. If you’re struggling to gather the funds you need, what are your options?

Read on for everything you need to know about start up business loans.

What Are Start Up Business Loans?

Small Business Administration (SBA) Loans offer several different types of financing for businesses.

With SBA loans, your business isn’t receiving money directly from the government. Rather, the loan comes from a commercial lending partner and the SBA guarantees it. This reduces the risks for both the lender and the borrower.

Because loan requirements depend on the government, economic or policy changes may affect the lending terms. If this occurs, there are many options for SBA loan forgiveness.

What Can I Use a Business Loan For?

Here are a few examples of how you can use a business loan:

  • Buying a business or expanding your current one
  • Buying commercial real estate
  • New building construction or upgrades to existing buildings
  • Buying equipment, machinery, or other supplies
  • Working capital or debt consolidation
  • Home or business property repair after a natural disaster

Depending on the type of loan, you may face different requirements for down-payments and collateral.

What Types of Business Loans Are Available?

The SBA currently offers four major types of loans. These include:

7(a) Loans

This is the most common and flexible type of business loan. You can use a 7(a) loan for working capital, purchasing real estate, construction and renovation, or debt consolidation.

The maximum loan amount for a 7(a) loan is $5 million. Loan maturity is up to 10 years for capital and 25 years for fixed assets.


As the name suggests, microloans are very small loans made to new or growing businesses. This is the perfect solution for companies that need start up business loans of less than $50,000.

Because the amount borrowed is less, the repayment terms are shorter. Six years is the maximum amount of time allowed to repay a microloan.

Real Estate and Equipment Loans

The CDC/504 Loan Program provides long-term, fixed-rate financing for major business assets. You can use these funds to purchase land or buildings, but you can’t use them for working capital or inventory.

The maximum amount for this type of loan is $5.5 million, with either a 10- or 20-year maturity term.

Disaster Loans

Businesses of all sizes that have suffered because of a declared disaster may be eligible for a disaster loan.

The SBA may loan up to $2 million to repair or replace real estate or damaged equipment.

Final Thoughts on Start Up Business Loans

If you’re starting a company, you have many options available to get the financing you need.

We invite you to peruse ULearning’s business and finance articles for more helpful advice.