When you are planning to start a new business, you go for a business loan and obtain financial support needed. In here, you need to consider how much money you should put as the down payment of the business loan. Otherwise, you will not be able to go ahead with your plans.
Factors that determine the down payment amount.
If you’re just starting a new business or are getting some equipment, how much to put down on a business loan will depend on how much cash you have to work with. There are numerous factors, which can create an impact on the down payment amount that you will have to put on obtaining a business loan. Most prominent factors out of them include:
- Amount of money that you want
- Type of business loan you go ahead with
- Your financial profile
- Purpose of the loan
You will need to provide information accordingly at the time of obtaining the loan. Then they will be evaluated by the lender subsequently, and you can move forward with the application process. If you have a strong financial history, you will be able to reduce the down payment amount and the interest rates.
Here are some of the most prominent loan types and the down payment you have to make on those loans. You can go through this list and make a better decision to obtain your loan with minimum hassle.
SBA loans
SBA loans can be considered as one of the most sought-after business loan types available out there to discuss. These loans are available for numerous businesses. Small Business Administration is taking care of who should be provided with these loans. In here, SBA is offering the loans by having a few traditional banks as lending partners.
When you are obtaining an SBA loan, you will have to place a down payment. This varies based on the exact SBA loan type that you are getting as well. For example, if you are obtaining SBA 7(a) loan, you will have to put a down payment of 10%. Likewise, you should put a down payment of 10% to 20% when you are trying to obtain a CDC 504 loan. No down payment is needed for SBA Disaster Loans, SBA Export Loans, SBA CAP Lines Program, and SBA Microloan as well.
Any type of business can think about obtaining SBA loans. At the time of getting the SBA loan, the business credit score will be evaluated as the main factor. They are heavily sought after by the lenders as well.
Commercial real estate loans
Purchasing commercial real estate is a popular business idea that you can find out there in the world. If you are planning to start such a business, you will need to go for massive investments. That’s where business loans can help you with.
Most of the commercial real estate loans will ask you to put a down payment. Even the down payment will be a considerably high volume, depending on the amount of money that you will have to invest in purchasing real estate. Therefore, you need to make sure that you are equipped with the required down payment amount before you move forward with the investment activities.
Commercial equipment financing
Businesses that come across the need to purchase new equipment for the market tend to go ahead with commercial equipment financing loans. Then you will be able to keep your business up and running with appropriate equipment by your side at all times.
The down payment amount here will mainly be defined by the loan amount that you are requesting. Based on that, your lender will ask you to place a down payment. In most instances, you will have to put a down payment of around 20% and obtain the remaining 80% as the loan amount.
The business line of credit
The business line of credit refers to the capital amount, which is available for a business to obtain immediately. Check Fortune Credit if you need capital and you may ask them how long the application process takes and how long it takes for you to receive your first loan. You will be able to use it. However, you will have to pay back the amount you borrowed in the future along with interest.
You don’t need to have any down payment when you are obtaining a business line of credit. You will only have to pay interest for the fund amount that you use. However, collateral is needed in some of the instances for you to obtain the business line of credit. It is also an excellent method available for you to develop an excellent credit score and a strong financial history along with time.
Final words
As you can see, the down payment amount you have to put when obtaining a business loan varies based on the option you select to go ahead with. Keep these facts in your mind and make sure that you go ahead with them so that you can end up with the best results at the end of the day.
