Traditional Loan Sources

Credit Cards - Easy Access

Today, money is readily available via credit cards to anyone with good credit. If you can manage your money so that you stay out of trouble, the use of credit cards can assist your investment activities. Before you use borrowed money for investing you need to have a plan of how you will repay the loan, and a back up plan in the event things do not go as planned.

SBA Lender Information

The SBA web site has information on SBA loan programs and loan preparation information. Most SBA loans are bank participation loans. Under the guaranty concept, commercial lenders make and administer the loans. The business applies to a lender for their financing. The lender decides if they will make the loan internally or if the application has some weaknesses which, in their opinion, will require an SBA guaranty if the loan is to be made. The guaranty which SBA provides is only available to the lender. It assures the lender that in the event the borrower does not repay their obligation and a payment default occurs, the Government will reimburse the lender for its loss, up to the percentage of SBA's guaranty. Under this program, the borrower remains obligated for the full amount due. The preceding underlined text is from the SBA web site.

The SBA web site goes into detail as to what they look for in a loan. Most of the loans are for owner occupied real estate and working capital loans. The SBA sets the requirements that the bank must meet before the loan is guarantied thus the banks require collateral and experienced business operators. They are not a good source for start up funding. The SBA does have some specialty loan programs that might fit your business and thus the web site deserves some time.

http://www.sba.gov/financing/index.html
Below are a brief outline of the more popular programs.

SBA Express Loans: Line of credit and term loans. Loans for machinery, equipment, furniture, fixtures, inventory, working capital, and business acquisitions.

SBA 7a Loans:Â Working capital up to seven years, equipment up to ten years, real estate up to twenty five years and business acquisitions.

SBA LowDoc: Loans for working capital, equipment, machinery, furniture, fixtures, inventory, and business acquisitions and real estate. Loans up to $150,000 with less paper work.

SBA 504 Loans: For existing companies with net worth under $6 million. Other limitations apply and special limits such as the company must create one job for every 35,000 borrowed. See SBA web site for details.

Bank Loans

Bank loans are normally made to businesses with at least two years track record. Banks are Cash Flow (net operating profit) lenders, and look for profitability, collateral, and the owner's experience. Visit some of the bank web sites for an idea of the types of loans available, and requirements. Wells Fargo and Bank America are two of the national companies pushing small business loans.

http://www.wellsfargo.com/
http://www.bankofamerica.com/index.cfm?page=smbiz

Peer to Peer lenders

Go to Google and do a search for Peer to Peer lenders and you can loan money, or borrow money, from others just like you and I.