What Are Some Different Types of Government Business Loans?


Quick Answer

Government loans available to businesses include agricultural, rural and farm service loans as well as business and industrial loans based on business type and size, according to Investopedia. Other loan options are available through the U.S. Small Business Administration. SBA loans include general small business loans, short-term loans available through its microloan program, and real estate and equipment loans, as the SBA's website details.

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Full Answer

Government loans for agricultural and farming businesses include loans for purchasing capital, such as livestock and equipment; loans for constructing farm storage and processing buildings; and loans for developing and maintaining housing for farm workers. Business and industrial loans focus on research and development, usually funding capital purchases, but they are also available to cover expenses such as management consultant services, according to Investopedia.

The SBA's general small business loan program, known as 7(a), provides funds for creating and expanding existing businesses. Special types of 7(a) loans are also available to assist employee stock ownership plans and for the implementation of pollution controls. Through SBA's microloan program, small businesses can borrow up to $50,000, with most loans averaging $13,000 as of 2015. The SBA typically passes microloan funds through community-based, nonprofit organizations that also provide consulting services to the recipient businesses, as the SBA details.

All government loans are guaranteed, but they are not necessarily funded by the government, and as noted by Investopedia, the federal government and state governments sometimes subsidize the interest rates for certain types of loans for a set period of time. The opportunity to defer payments and flexible repayment options are also characteristic of government business loans.

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