When it comes to opening up a new business or launching a new product, navigating the financing process can be a challenge. If you are wondering which type of business loan is right for you, we’re here to break it down for you.
SBA Loans: The U.S. Small Business Administration (SBA) offers small business loans to entrepreneurs who want to start a new business or expand an existing business. SBA loans are offered by a range of banks and lending institutions. Keep in mind that SBA loan applications are structured to meet SBA requirements to ensure that the loan is eligible for an SBA guarantee. Before you apply for an SBA loan, you will want to be sure to look at the SBA Loan Application Checklist. Also, keep in mind that the SBA runs several loan programs:
- The Basic 7a Loan Program: This basic loan program provides loans to entrepreneurs starting, acquiring, and expanding a small business. This is the most basic and the most widely used SBA loan program.
- Certified Development Company (CDC) 504 Loan Program: If you want to grow your business by expanding your product offerings, this can be an excellent option. It provides businesses with long-term, fixed interest rate loans with major assets as collateral.
- Microloan: If you are just getting started and want to launch a new product, a microloan can also be an excellent option. These loans are offered to newly established businesses for up to $50,000.
Working Capital Loans: If you want to release a new product but don’t have required working capital to pump into the development process or a prototype, a working capital loan can be an excellent option. These loans can essentially be used to convert company or personal assets into cash.
Equipment Loan: If you need new equipment to manufacture a new product, a new equipment loan can help. This will provide you with the working funds to purchase new equipment with collateral.
Merchant Cash Advance Loan: These loans are smaller than traditional business loans, and the payment terms are shorter. In some cases, the lender may take a fixed percentage of your future credit card sales in payment.
Lines of Credit Loan: A line of credit is different from a standard small business loan, in the sense that it essentially functions as a line of credit (like a credit card). This is ideal for businesses that might sell more products seasonally and need some cash to get them through the low season. Overall, these loans are ideal for helping businesses manage their cash flow.
Pivot International is a product design, development, and manufacturing firm with strengths in software development, electrical engineering, mechanical engineering, and industrial design. If you are interested in engineering a new product or updating an existing product, contact us at 1-877-206-5001 or request your free consultation today.