SBA Loans

How to get a small business administration loan

The U.S. Small Business Administration is a valuable resource for prospective small business owners, as it can be the crucial link between a bank loan and your start in the world of small business. A small business administration loan is not really a loan at all, but rather acts as a guarantee to the lending institution that you will not fail to repay the loan. There is a range of SBA financing to help you obtain funding that you have not been able to secure on your own; take advantage of their tools and resources to make sure your business gets off to a good start.

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SBA Financing

If your small business has been turned down for a conventional commercial loan, there are several SBA loans available to you, broken down into three primary programs. The 7(a) loan program is the most popular SBA business loan program: it includes the Lowdoc program and the SBA Express program, and both are designed to get the money from the lender to you as quickly as possible. This type of loan is available to any small business that has less than $7 million in net worth (that is, total assets minus liabilities), but especially to those business that have been in operation for a couple of years.

The SBA's 504 loan program is similar to the 7(a) program in that it is designed to bridge the gap between lender and borrower, but the 504 loan program targets small business equipment purchases instead of more general financial needs. The third popular government SBA loan is called the Microloan program, which is intended to provide relatively small loans to be used for a wide range of small business purchases. This program differs from the typical SBA loan in that it is actually funded by the SBA, and it carries an extra requirement—all Microloan borrowers have to enroll in technical assistance classes, whether or not they want to take them.

SBA Loan Application

If you have decided to tap into the SBA resources for your small business capital, you will first need to show that you have already been turned down for a conventional loan by a lender. Next, you will meet with an SBA-affiliated lender to present your business plan, financial statements and a description of how the SBA commercial loan will serve your business. The SBA loan application will reflect on your personal skills, as well; the more organized and professional you are in this meeting, the better your chances of gaining the financial assistance you need. Visit the SBA's website for all of the details on the application process.