Free Help from SBA for Small Business Loans

Why would anyone be interested in helping you for free?

The government benefits when they give start-up loans to small businesses, so they help.

o Statistics show that small companies count more than large companies.

o Small businesses employ more than 50 percent of the labor force.

o Small businesses contribute more than 50 percent of the nation’s gross domestic product GDP.

o Small businesses are the main source of new jobs.

Starting a small business or expanding your small business is not easy. Expert guidance and help is available free of charge from SBA. The US Small Business Administration was established in 1953 and has offices in every state. SBA works with thousands of credit, education and training organizations nationwide. It does not award scholarships but offers advice. Government small business loans are offered to many entrepreneurs. Check the state business development websites to see if it’s available in your state.

SBA is only a guarantor for loans offered by banks and other private financial institutions. The lenders that agree to the terms of the SBA make small business loans through the SBA. In case of inability to repay the loan within the stipulated period; The SBA pays the agreed guarantee amount to the lender, and the borrower must pay the SBA the full amount.

Can the SBA help you?

A small business is a business that is independently owned and operated and not dominant in its field of activity. SBA has rules to determine if your business qualifies as a small business. You can check the SBA website or federal regulations to determine if your small business start-up loan or small business expansion loan is eligible. If your business has qualified, then the next question any lender would ask you is: do you have a business plan?

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Most lenders require a detailed description of the business you are planning to start or expand. Check the SBA website http://www.sba.gov/starting_business/index.html for planning options and advice. The many things SBA will help you with are

o Creation of a business plan

o Obtaining the Loan

o Marketing

o Licenses and Laws

o Patents and copyrights

o Sales to authorities and abroad

o Hiring of employees

o Buying the right equipment.

Notable among the various programs are small business loans for minorities, small business loans for women, small business loans for veterans and young entrepreneurs. The various small business loan programs offered by SBA are.

Basic 7(a) Loan Guarantee

This is the primary business loan program. It is offered to those who do not qualify for credit through the normal credit channels. The terms offered by SBA are more flexible. Eligible loans are those where the proceeds of the loan are used for sound business purposes. Depending on the working capital and fixed assets, the term is 10 to 25 years. http://www.sba.gov/financing/sbaloan/7a.htm

Credit Pre-Qualification

Low-income borrowers, disabled business owners, exporters, rural and specialized industries are the target groups of this program. Small business loans with bad credit do not fall into this category. If the applicant has a loan, it is easier to secure the loan. http://www.sba.gov/financing/sbaloan/prequalification.htm

Certified Development Company (CDC), a 504 loan program

This is a variant of the Basic 7(a) loan to purchase real estate or equipment for expansion or modernization. http://www.sba.gov/financing/sbaloan/cdc504.htm

Micro Loan, a 7(m) loan program

This is available at select locations in most states. The SBA vouches for organizations that have provided loans, technical assistance, and small finance administration. Nonprofit childcare organizations can also use these loans for working capital or to purchase inventory or supplies. http://www.sba.gov/financing/sbaloan/microloans.htm

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disaster recovery

Homeowners, property owners in disaster areas qualify for this loan program. The loan term is 30 years and the interest rate is under 8 percent for those who can get credit elsewhere and under 4 percent for those who cannot get credit elsewhere. http://www.sba.gov/disaster_recov/loaninfo/property.html

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