Educate Yourself – Loan Programs for Small Businesses
If you’re considering starting a small business, your first stops need to be MoreBusiness.com, a one stop small business resource center (type “loans” in search node) and the U.S. Small Business Administration’s website. They offer many services and tools you’re likely to find helpful.
Today, we will discuss SBA loan programs.
There seems to be some confusion surrounding the role of the SBA in providing startup financing via loans for small businesses.
First, the SBA – an independent agency of the Executive Branch of the Federal Government – does not actually make loans to businesses.
But, what they can do is guaranty loans made to small businesses by their partners.
Their partners might include community development organizations, lenders and microlending institutions.
Two SBA Loan Programs Especially Designed For New Businesses
SBA has a five different loan programs. However, the two listed below are specifically designed for new businesses…
- Basic 7A Program – This program is the most frequently used loan program by the SBA.
In the most general terms, a business owner applies for a loan through a commercial lender who, depending upon their confidence in the borrower, may ask the SBA to guaranty a portion of the loan.
Visit Small Business Administration – Basic 7(a) Loan Program for more info.
- Micro-Loans – This program offers small ($35,000 or less), fixed rate, short-term loans to both new and growing businesses.
Intermediary lenders are likely to require some type of collateral and the personal guarantee of the business owner. They may also require the business owner to fulfill training or planning requirements prior to even being considered for a loan.
For more details, visit Small Business Administration – Micro-Loans.
If you need startup or expansion funds, Morebusiness.com and the SBA are both great resources.
