Starting a new business can be a daunting task. You should learn everything, from funding to naming your business. The most difficult part for most people during the set-up is financing. This is particularly true to small businesses. But small business plays an important role in the development of our economy. It’s proved to be the most powerful engine of opportunity and economic growth in the United States. That’s where Small Business Administration comes in.
Why Choose SBA?
SBA is a United States government agency that is dedicated to supporting entrepreneurs and small businesses. Through enabling the establishment and viability of small businesses, SBA is committed to maintaining and strengthening our economy. The Small Business Administration also helps the economic recovery of communities after serious disasters.
In each state of the United States, there’s at least one SBA office offering counseling services and products. With a mission of providing support to small businesses across the nation, SBA gives you comprehensive information and services based on your unique business needs. At SBA, you’ll find a large variety of financial assistance programs, including grants, bonds and loans.
SBA does not issue loans directly. The loans are given through banks, credit unions and other lenders who have partnerships with the SBA. A government-backed guarantee will be provided on part of that loan.
SBA Loan Programs
SBA boasts a well collection of loan programs for various situations. These financial assistance programs aim to resolve the key financing needs of small businesses. Here’re three loan programs for small businesses and you can check whether you qualify to participate.
• 7(a) Loan Program
Under this loan program, the SBA provides financial help to businesses with special requirements. For example, the Export Loan Programs provide loans for small businesses that handle exports to foreign countries. Rural Business Loans are designed for small community/rural-based lenders. This unique loan simplifies and streamlines loan application process to accommodate their needs. Besides, SBA 7(a) Loan Program also includes many loans for other very specific purposes.
• Microloan Program
With the Microloan Program, small business concerns and some not-for-profit child-care centers can receive small, short-term loans. The loans are given through specially designated intermediary lenders. These intermediary lenders are usually non-profit community-based organizations that are experienced in lending, management and technical assistance. A microloan can be made to eligible borrowers with a maximum of $50,000. But microloans have an average amount of $13,000.
• CDC/504 Loan Program
This long-term financing tool is designed to boost the community’s economic development. Long-term fixed-rate loans are provided to small businesses to buy major fixed assets for modernization or expansion. Only businesses within the size standards set by the SBA qualify for a CDC/504 loan. Another criterion is that the business must be operated for profit.
In addition to special loan programs for small businesses, the SBA also has low-interest disaster loans for individuals and businesses suffering from a declared disaster. Homeowners, renters, businesses and private, non-profit organizations can apply for disaster loans from SBA. Different types of disaster loans are provided based on physical and economic damage types.
Home and Personal Property Loans
Victims of a declared disaster may qualify for the SBA financial assistance. Whether you’re a homeowner, a renter or a personal-property owner, you can apply for a Home and Personal Property loan to help you recover from a disaster. For primary residence damaged in the disaster, homeowners can get a maximum loan of $200,000 to repair or replace their home to its pre-disaster condition. To repair or replace in-house items, like furniture and appliances, homeowners and renters can borrow up to $40,000.
Three other types of disaster loans are:
- Business Physical Disaster Loans
- Economic Injury Disaster Loans
- Military Reservists Economic Injury Loans
Several convenient ways can help you make a payment on a disaster loan. Payments can be made online, by phone or by mail. If you want to make your payment by phone, please call 1-800-490-2498 or 1-800-659-2955. Or you can mail your payments to the following address:U.S. Small Business Administration Collections P.O. Box 740192 Atlanta, Georgia 30374-0192
Tips to Apply: To increase your chances of being approved, you should do enough homework before meeting a lender. First you need to evaluate and understand your situation and financial needs, and then you’ll know what you need most. Before meeting with a lender, you should collect all documents needed to complete your loan application, like executive summary, business profile, personal & business financial statements and other items.
Many different formats can be used for a loan proposal. To determine which format works best for you, you can contact your lender. Be sure to include all industry-specific details in your proposal. You should make every possible effort to give the best presentation in your initial loan submission. In most cases, you do not have a second chance to get approved.
SBA Official Website: http://www.sba.gov
Financing a small business can be intimidating. There’s no denying that you do have a variety of options, like traditional loans, grants, bonds and investor-based venture capital. Since small business plays an extremely important role in America’s economic growth, federal, state and local governments manage to help small businesses start and grow their operations through a wide range of financing programs.
This web site is not affiliated with SBA. We recommend SBA official site for more accurate information of its financial services.