Published May 5, 2008

Government Assistance for Small Businesses

You may be starting a new business or have been running one for years. In either case, the result is the same - times are tight and you need money. And money, especially in the midst of financial turmoil, is never easy to come by. But there is hope.

The SBA has been specifically appointed by the United States Government to help small business owners to stand on their own two feet financially, and they've been doing it for decades.

Here's how they can help you do the same.

Find an SBA Office in Your Area

Find the local SBA office in your area. Pay them a visit to learn about their various programs and the documentation needed in order to qualify for any of their loan programs.

They Will Help You to Draw Up a Plan

Once you approach the SBA, they will help you in drawing up a plan after scrutinizing your financial documents.

You may be granted a loan only if you fulfill their requirements. You will need to submit a lot of documents and show a lot of promise in starting and running your business.

If your business is an existing one, you should be able to show that you've been profitable over the last few years. You should also be able to show them a solid business plan, with goals and outcomes highlighted.

No Need for a Guarantee

The SBA does not grant loans all by itself; rather, it will stand as your guarantor if you qualify for a loan. You will need to submit your financial documents from the past 2 financial years in order to qualify for a loan.

Since the SBA will stand as your guarantor, lenders will be more open to giving you a loan - and in case you default on your repayment, the SBA will be liable. That's why you have to produce such stringent documentation.

You might still have to deposit collateral against the loan, since the SBA will not be able to eliminate that requirement.

Use the Services of the SBIC

The Small Business Investment Companies [SBIC] are licensed by the SBA. These are privately owned companies that have their own capital and other funds, borrowed from the Federal Government. They can provide venture capital for your small business, whether it is new or already running.

SBICs are profit-making companies whose aim is to identify companies with potential - and invest their money in them to earn a part of their profits.

The SBA Has Programs for Contractors Too

If you are a contractor who needs to provide bonds, then the SBA has a program called The Surety Bond Guarantee [SBG] Program, which offers to guarantee you contracts worth up to $2 million.

The SBA will assume a predetermined percentage of the loss, in case you are unable to fulfill the contract. So, if you are unable to arrange for a surety bond through regular channels, then the SBG Program can help you out.

Special-Purpose Loans

The SBA program also offers special-purpose loans if you need capital for export purposes (if you have an import-export business). This loan can either be for a single export contract or can stretch over a 12-month period.

If your small business has been hit by the recession, and you are probably wondering how to get your business financed. You may even be thinking of starting a new business. The SBA can help provide you with advice and financing until you manage to find your footing.