The U.S. Small Business Administration (SBA) provides a
number of financial assistance programs for small businesses.
This posting provides information about the
SBA guaranteed loan programs.
The SBA
does not lend money to small businesses, but guarantees loans made by SBA
partners, primarily lending institutions (banks, community development
organizations, etc.).
The SBA’s
guarantee is the inducement for lenders to make loans that they otherwise would
not make.
The SBA guarantees that the
loans will be repaid thus eliminating the risk to lenders.
The SBA sets guidelines and requirements for
the loans to fulfill the SBA guaranty.
SBA
loans will not be made to businesses if the borrower has access to other
financing on reasonable terms.
SBA loans
can provide financing to qualifying fledgling small businesses and start-ups
when they are unable to secure conventional financing.
There are several types of SBA loans available to small
businesses:
-
General small business loans 7(a). This is the SBA’s most common loan program
and can be used to purchase equipment, renovate your facility, access working
capital and other special needs.
-
Microloan program. Can be used to obtain a revolving line of
credit, or term loan for short-term working capital and other purposes.
-
Real estate and equipment loans CDC/504. This type of loan can be used to finance
major fixed assets such as equipment or real estate with terms of up to 20
years.
As an incentive to help make financing more available to
small businesses the SBA is waiving its guaranty fee on loans of $150,000 or
less through September, 2014.
This can
result in a savings of more than $2,500 on a $150,000 loan.
Also, effective January 1, 2014 the SBA
launched a program for small business owners who are veterans, the SBA
Veterans’ Advantage, which waives fees on loans up to $350,000.
This program is also available through
September, 2014.
The National Small Business Resource Guide which can be
accessed from the SBA website,
www.sba.gov,
can be helpful in deciding whether to seek an SBA guaranteed loan for your
business.
Please see my blog posting dated February 11, 2014 for steps
to take before talking to a business banker to see if you qualify for an SBA
guarantee.
