Free help from the SBA for small business loans
Why should someone be interested in helping you for free?
The government benefits if it gives small business start-up loans and that is why it helps.
o Statistics show that small businesses outnumber large businesses.
o Small businesses employ more than 50 percent of the workforce.
o Small businesses contribute more than 50 percent of the nation’s GDP-Gross Domestic Product.
o Small businesses are the main source of new jobs.
Starting a small business or expanding your small business is not easy. The SBA provides you with free expert guidance and help. The US Small Business Administration was established in 1953 and has business offices in every state. The SBA works with thousands of lending, educational, and training institutions across the country. Does not provide grants, but does offer advice. Government small business loans are offered to many entrepreneurs. Check the websites of state economic development agencies to see if it is available in your state.
SBA is only a guarantor for loans offered by banks and other private financial institutions. Lenders that accept SBA terms make loans to small businesses through the SBA. In case of impossibility of reimbursement of the loan within the stipulated time; the SBA pays the lender the agreed guarantee amount, and the borrower must pay the SBA the full amount.
Can the SBA help you?
A small business is one that is independently owned and operated and is not dominant in its field of operation. The SBA has regulations to determine if your business qualifies as a small business. You can check the SBA website or federal government regulations to find out if your small business start-up loan or small business expansion loan qualifies. Your business has qualified so the next question any lender would ask you is: Do you have a business plan?
Most lenders will require a detailed description of the business you are starting or expanding. Search the SBA website at http://www.sba.gov/starting_business/index.html for planning options and advice. The many things the SBA helps you with is
o Write a business plan
or get the loan
or Marketing
o Licenses and Laws
o Patents and copyrights
o Sale to the government and abroad
o Recruitment of employees
o Purchase of the appropriate equipment.
Notable among its 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 the SBA are:
Basic 7(a) loan guarantee
This is the premier commercial loan program. It is offered to those who do not qualify for loans through normal lending channels. The terms offered by the SBA are more flexible. Valid loans are those where the loan proceeds are used for sound business purposes. The maturity is from 10 to 25 years depending on the working capital and fixed assets. http://www.sba.gov/financing/sbaloan/7a.htm
Loan Prequalification
Low-income borrowers, disabled entrepreneurs, exporters, rural and specialized industries are targeted by this program. Bad credit small business loans do not fall into this category. The applicant has creditworthiness so 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 obtain real estate or equipment for expansion or modernization. http://www.sba.gov/financing/sbaloan/cdc504.htm
Micro Loan, a 7(m) loan program
It is available at select locations in most states. The SBA stands as guarantor of the organizations that provided the loans, technical assistance, and management for small-scale financing. Nonprofit child care centers can also take advantage of these loans for working capital or to purchase inventory or supplies. http://www.sba.gov/financing/sbaloan/microloans.htm
Disaster recovery
Homeowners, homeowners in disaster areas qualify for this loan program. The loan term is 30 years and the interest rate is below 8 percent for those who can obtain credit elsewhere and below 4 percent for those who cannot obtain credit elsewhere. http://www.sba.gov/disaster_recov/loaninfo/property.html