Small Business Administration SBA Loans

SBA Loans involve a long process, but are definitely worth investigating. Do this at the same time you are talking with investors. The U.S. Small Business Administration (SBA) is an independent Agency of the Executive Branch of the Federal Government. Financial Assistance is delivered primarily through SBA’s Investment programs, Business Loan Programs, Disaster Loan Programs, and Bonding for Contractors.

The Agency administers three separate, but equally important loan programs. It sets the guidelines for the loans while SBA’s partners (Lenders, Community Development Organizations, and Microlending Institutions) make the loans to small businesses. SBA backs those loans with a guaranty that will eliminate some of the risk to the lending partners.

The Agency's Loan guaranty requirements and practices can change however as the Government alters its fiscal policy and priorities to meet current economic conditions. Therefore, past policy cannot always be relied upon when seeking assistance in today's market.

PROGRAM: Basic 7(a) Loan Guaranty

FUNCTION: Serves as the SBA’s primary business loan program to help qualified small businesses obtain financing when they might not be eligible for business loans through normal lending channels. It is also the agency’s most flexible business loan program, since financing under this program can be guaranteed for a variety of general business purposes.

Loan proceeds can be used for most sound business purposes including working capital, machinery and equipment, furniture and fixtures, land and building (including purchase, renovation and new construction), leasehold improvements, and debt refinancing (under special conditions). Loan maturity is up to 10 years for working capital and generally up to 25 years for fixed assets.

CUSTOMER: Start-up and existing small businesses, commercial lending institutions.

DELIVERED THROUGH: Commercial lending institutions

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For more information on SBA Loans go to http://www.sba.gov/financing/

Preparation of the Business Plan is a Vital First Step in your quest for capital, so a great deal of time and effort should be spent preparing the business plan.