SBA Loans 

Banks, savings and loans, credit unions, and other specialized lenders participate with the US Small Business Administration (SBA) on a deferred basis to provide SBA guaranteed small business loans to businesses meeting certain criteria.

To apply for a 7(a) general small business loan, businesses must meet the following eligibility:

• Operate for-profit
• Be small, as defined by SBA
• Be engaged in, or propose to do business in, the United States or its possessions
• Have reasonable invested equity
• Use alternative financial resources, including personal assets, before seeking financial assistance
• Be able to demonstrate a need for the loan proceeds
• Use the funds for a sound business purpose
• Not be delinquent on any existing debt obligations to the U.S. government

7(a) loans have a maximum loan amount of $5 million. SBA does not set a minimum loan amount. For more information about 7(a) loans, click here.

Microloans 

The SBA Microloan program provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000 and can be used for: working capital, inventory or supplies, furniture or fixtures, and machinery or equipment. For more information, click here.

Opportunity Fund is an approved SBA lender and offers Opportunity Loans from $2,600-$20,000, Small Business Loans from $20,000-$100,000 for working capital, equipment, remodels, as well as other financing options. 

For more information, click here.

If you don’t qualify for many of the traditional loan options you can consider some alternatives.

A Business Line of Credit

A line of credit can be helpful if you need short-term working capital. Unlike a business loan, you can apply for a line of credit before you need it and use it only when you need it. Repayments are only made as, and when, money is borrowed. Lines of credit can be used to fund inventory, purchase new equipment, overcome cash flow issues, etc. Of course, there are drawbacks – such as accumulated debt.

Credit Unions 

An attractive option for small business owners, these member-owned, not-for-profit financial cooperatives offer a range of savings, credit and financial services that emphasize affordability. They also offer higher savings rates and lower loan rates than traditional banks. Credit unions offer their own term loans (many with flexible repayment schedules and the opportunity to pay down loans ahead of time without penalties), lines of credit, as well as SBA loan programs.

Crowdfunding

Crowdfunding is the process of raising money to fund what is typically a project or business venture through many donors using an online platform. Some popular platforms include Kickstarter, Indiegogo, and KivaZip. We’ve had many Santa Cruz businesses find success in launching their product through crowdfunding. The most important aspect of this method is developing your story and connecting with the community and those who would be interested in investing in your product. A compelling story that reaches people on a personal level can draw in a committed following that’s willing to invest and tell their friends about your product. Before embarking on a crowdfunding campaign, get familiar with the U.S. Securities and Exchange Commission rules and requirements.You’ll find the information here.