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#LoanTipSixty: Understanding Down Payments for a small business loan

July 18, 2019 | Small Business Loans
video understanding small business loan down payments

Are you familiar with CDC’s #LoanTipSixty Video Series, where experts from CDC share financing  insights in just 60 seconds? Read below for the key takeaway from our #LoanTipSixty: Understanding Small Business Loan Down Payments video or watch the video here.  Follow the series on CDC’s YouTube Channel.

 

Understanding Down Payments

You may have heard some confusing loan terms like injection and down payment.  Not sure what they mean? Use this quick guide to learn all you need to know about  down payments for a small business loan.  A small business loan down payment is similar to a down payment on a house — this is money that you (the owners of the business) will put into the business – not money that is paid to the lender.

How Much Is Required?

It’s important that you ask your lender how much they require for the down payment. Here at CDC Small Business Finance, for startups we require 20% down and for business acquisitions and expansions we require 10% down. Note that this can vary from lender to lender. 

How Do I Fund My Down Payment?

The down payment can come from a variety of sources — cash on hand or savings, funds from your 401K or a home equity line of credit. At least half of the down payment has to come directly from the owners of the business. The other half can be gifted to you by friends, family, investors, or another source — but it cannot come from another debt source, such as a loan or credit card. The down payment will be required as a closing condition to the loan and will take place after loan approval. It will be required to fund the loan. 

We’re Here to Help 

Here at CDC Small Business Finance, we work alongside our borrowers and support them far beyond just getting financing. Our team of loan experts will help guide you through the loan process and help you with everything from understanding small business loan down payments to what documents you need to how to expedite the process. Don’t be shy! We’re here to help. 

Watch the Understanding Down Payments Video


CDC Small Business Finance offers several loan options for business owners who want to grow their operations and are planning for their long-term needs.  Tell our loan experts about your business, and they’ll work to match you with a financing plan that best suits you. Let’s talk! Reach us at loaninfo@cdcloans.com or (619) 243-8667.

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