What Guaranteed Loans are Available for Small Businesses

When it comes to government-guaranteed loans, a small business owner needs to look no further than the SBA. Learn about how to find the right guaranteed loan program.

Any small business entrepreneur will tell you that finding capital to start or grow a business is essential to success. While financial capital comes in many forms, small business loans are the most frequently used method of financing.

However, where can a small business owner find loans with a suitable interest rate? Or how can you obtain financing if you have less-than-average credit? What if you need a short-term loan?

Small business owners have a strong ally in the U.S. government. The government knows that small businesses are the backbone of the American economy. To help the small business owner, it formed the Small Business Administration (SBA) in 1953 to provide aid in many forms. One of those helpful forms is guaranteed small business SBA loans. Guaranteed loans for small business make it easier for entrepreneurs to get approved for a loan with local banks.

Here are just a few programs sponsored by the SBA:

Basic SBA 7(a) Loan Program

This is the SBA’s primary program for small business SBA loans. It is the most flexible and most commonly used small business loan program.

A small business owner must apply for this type of loan with a lending institution that accepts this program. However, the SBA guarantee makes it easier for small business owners to qualify and get approval for startup or expansion loans.

A SBA 7(a) program can help small businesses in a number of ways such as:

  • Export Loan Programs
  • Rural Lender Programs
  • Special Purpose Loan Programs

CDC/504 Loan Program

The Certified Development Companies (CDC) 504 program guarantees long-term loans for small businesses for the purchase of fixed assets or modernization for expansion and job creation. These loans are not distributed by banks, but rather private non-profit corporations set up specifically to aid the economic development of their local communities. Check for a local CDC in your area by contacting your SBA district office.

Microloan Program

The SBA also has designed a microloan program that provides short-term small business loans up to $35,000. Small business owners can use funds for the purchase of inventory, supplies, furniture, fixtures, machinery, and equipment necessary to help a business expand or get off the ground.

Like the CDC 504 loan, these loans are approved and funded by private, specially designated intermediary lenders rather than banks.

Disaster Loans

Floods, tornados, hurricanes: disaster strikes portions of the country on any given day. To help small businesses get back on their feet after a disaster, the SBA designed the Disaster Assistance Loan Program. These low-interest loans help small businesses and non-profit organizations to rebuild or replace real estate, personal property, machinery, and equipment that was damaged or lost due to a declared disaster.

When it comes to small business loans, one needs to look no further than the SBA to find a host of programs for many business needs. Check with your bank or your local SBA District Office to find out how your business can benefit from a small business SBA loan.

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