Avoid loan confusion and find a business loan that’s right for you$traight Talk — By Robert Myles on July 5, 2012 at 8:00 am
If your small business is in need of additional funds, whether for new equipment, an expansion, or more inventory, there are many different types of loans available. Look over the list below to decide which loan might be best for your business’s purchasing needs.
- • Term Loans: A term loan can be used to purchase capital assets, permanent working capital or make a business acquisition, as well as to refinance an existing business debt. They are generally for $25,000 to $2 million per transaction and are 12 to 180-month loans. Both fixed and variable rate options are available. First lien via Uniform Commercial Code filing and loan security agreement on business assets is sufficient to fully secure the transaction.
- • Commercial Real Estate Loans: These loans are used to purchase or refinance commercial, industrial, or investment property. They are typically $25,000 to $7.5 million per transaction, with terms up to 15 years. A commercial real estate loan has up to 80 percent loan-to-value for owner or user properties and up to 75 percent loan-to-value for investment properties. The first lien is filing on the subject property, and the loan amortization is up to 25 years.
- • Lines of Credit: Lines of credit are available for any general business purpose. They are usually for $50,000 to $500,000. The first UCC filing is together with a loan security agreement on accounts receivable, inventory, machinery, equipment, general intangibles, or any other available collateral that will fully secure the loan. Lines of credit are generally reviewed on an annual basis, and rest period requirements may vary. Variable rates are spread over the Wall Street Journal Prime Lending Index.Financial institutions can be approved for partnership with the Small Business Administration to administer two specific types of loans: SBA 7 (A) and SBA504. The Small Business Administration loan programs are long-term financing tools designed to help you expand your growing business.
- • SBA7 (A): This product can be used for business startups, business expansions, business acquisitions, commercial real estate purchase, machinery and equipment purchase, working capital, and debt refinance. Required equity injections for the borrower can be as low as 10 percent. Loans are up to $2 million per transaction with terms up to 25 years. Variable rates are spread over the Wall Street Journal Prime Lending Index.
- • SBA504: This product provides a growing business with long-term financing for major fixed assets, such as land and building purchase or expansion, or machinery and equipment purchase. A portion of the financing offers fixed rates up to 20 years. Required equity for the borrower can be as low as 10 percent. Loans are up to $4 million per transaction, with terms up to 20 years. Both fixed and variable rates are available.
To learn more about the small business loans available at Telhio and for more information about Telhio’s other financial services, visit our website at Telhio.org or contact me at firstname.lastname@example.org or 614-221-3233 ext. 8196.
Telhio Credit Union is open to everyone who lives, works, worships or attends school within Franklin County and surrounding communities. Founded in 1934, originally as the credit union for the Columbus Telephone Co., Telhio is a not-for-profit financial cooperative where its members are also its owners. Driven by its philosophy that members come first, Telhio is committed to the highest standards of responsibility and conduct.
Telhio offers a variety of innovative programs, services and products to support its members’ financial needs. Telhio offers seven branching offices throughout central Ohio and nearly 4,000 shared branching locations nationwide. Additionally, Telhio participates in the highest level of combined federal and private share savings insurance available, insuring deposit accounts up to $500,000.*
* Federally insured by NCUA. Additional coverage up to $250,000 provided by Excess Share Insurance Corporation, a licensed insurance company.
Robert Myles joined Telhio Credit Union in 2005 as Senior Vice President of Lending and Retail Services. In this role, he oversees the credit union’s lending services, which includes a wide range of home, personal, vehicle and business loans, and implements strategic plans for the company as they relate to loan assets. Robert is a graduate of Ohio Dominican University with a bachelor’s degree in cross disciplinary studies. He is a certified credit executive by the Society of Certified Credit Executives and an instructor for the American Institute of Banking. He can be contacted at email@example.com or 614-221-3233 ext. 8196.
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