Government Q & A- How Can I Get a Small Business

How Can I Get a Small Business Loan Backed by the SBA?

Starting up your own business normally entails securing a financial source. Luckily, the SBA offers several financial programs to meet the needs of small businesses.

What is the SBA?

SBA stands for Small Business Administration. This organization works for the interests of small businesses within the federal government. Note, however, that the SBA is not a lending company as it does not directly lend money to small businesses. Rather, the SBA provides assurance to local banks or credit unions that you will pay your loan as agreed, should you ask for assistance.

The financial assistance programs available at the SBA are geared at meeting the specific demands of small businesses, such as surety bonds and debt financing. To qualify, you should be able to pass the specific qualifications for each program.

Financial Programs Offered by the SBA

· 7(a) Loan Program

This program provides financial assistance to small businesses passing specific requirements. You will be given funds if, for instance, your business handles exports to overseas markets or operates in remote areas.

· Microloan Program

This program offers some types of nonprofit child-care centers and small businesses small and short-term loans. Then the SBA entrusts funds to authorized intermediaries that are nonprofit in nature and knowledgeable in lending and management assistance. Only eligible creditors are provided with loans from these intermediary lenders. The average loan is approximately $13,000, and the maximum loan is $50,000.

· CDC/504 Program

This program offers long-term financial aid to promote community economic development. The 504 program realizes this goal by giving long-term financing to procure large-scale properties.

How to Apply for an SBA-Backed Loan

The application process for securing an SBA loan can be frustrating. Lenders usually require comprehensive documentation to evaluate the request of borrowers. When applying, you should do your best the first time you submit your loan proposal as you might not get a second chance.

You can use a number of formats in creating your loan proposal. To know which format is best, you should communicate with the lender you are planning to approach. In crafting your proposal, make sure to specify your industry and the type of your business.