Venturing into a small-scale business may require less investment that getting into a medium or large-scale enterprise, but the requirements are just as complicated. If you are considering starting-up a small business, the SBA or Small Business Administration can help you secure financial assistance.
The SBA is not a lending institution and it does not give out loans directly. What it does is guarantee the loan that you will take out of banks and other money lenders. This guarantee will help you get the loan you want faster and easier.
Micro-loan Program
The SBA funds non-profit lenders in the community under the Microloan Program. These lenders in turn use the funds to provide loans to eligible applicants. Under the Microloan Program, owners of small businesses can take out loans of up to $35,000 (the average loan is $13,000). The typical payment term is over six years, but this may vary from plan to plan. Interest rates may also vary, but are usually around 8-13%.
To apply for the microloan, you will have to satisfy certain requirements. For example, lenders may ask for a collateral or written guarantees. Some lenders may also require borrowers to take a seminar of short term training prior to approving the loan. This can be beneficial because you will acquire information and skills necessary for operating your small business.
7(a) Loan Program
Under the Program, the SBA guarantees the loan that you take out from money lenders, thus sharing the risk with the lender. However, the SBA guarantee does not necessarily mean immediate approval of the loan as it is still up to the lender to decide on it. However, if you do qualify, you can take out a loan of up $750,000.
There are certain criteria that will have to be met under this loan program. These include:
- Business size requirements
- Certain business types
- Areas the funding will be used for
- Financial capability of the business
There are different types of loans under the 7(a) Program. For instance, there is the SBA express which can allow you to secure a loan as high as $350,000 in less than 3 days.
Another useful kind of loan is called the Community Express loan, which is best for businesses getting established in areas that need them the most. Borrowers can take out as much as $250,000, and the SBA also assists in technical training.
The CDC or 504 Loan Program
This is a special kind of loan that the SBA has certain tight restrictions. For instance, you can't take out this loan for working capital, refinancing, or paying off debts. But you can use this loan in the following ways:
- In buying land
- For expanding, renovating, and adding new facilities
- To provide parking facilities
- To buy equipment and machinery
- Landscaping
The SBA is not a lending institution and it does not give out loans directly. What it does is guarantee the loan that you will take out of banks and other money lenders. This guarantee will help you get the loan you want faster and easier.
Micro-loan Program
The SBA funds non-profit lenders in the community under the Microloan Program. These lenders in turn use the funds to provide loans to eligible applicants. Under the Microloan Program, owners of small businesses can take out loans of up to $35,000 (the average loan is $13,000). The typical payment term is over six years, but this may vary from plan to plan. Interest rates may also vary, but are usually around 8-13%.
To apply for the microloan, you will have to satisfy certain requirements. For example, lenders may ask for a collateral or written guarantees. Some lenders may also require borrowers to take a seminar of short term training prior to approving the loan. This can be beneficial because you will acquire information and skills necessary for operating your small business.
7(a) Loan Program
Under the Program, the SBA guarantees the loan that you take out from money lenders, thus sharing the risk with the lender. However, the SBA guarantee does not necessarily mean immediate approval of the loan as it is still up to the lender to decide on it. However, if you do qualify, you can take out a loan of up $750,000.
There are certain criteria that will have to be met under this loan program. These include:
- Business size requirements
- Certain business types
- Areas the funding will be used for
- Financial capability of the business
There are different types of loans under the 7(a) Program. For instance, there is the SBA express which can allow you to secure a loan as high as $350,000 in less than 3 days.
Another useful kind of loan is called the Community Express loan, which is best for businesses getting established in areas that need them the most. Borrowers can take out as much as $250,000, and the SBA also assists in technical training.
The CDC or 504 Loan Program
This is a special kind of loan that the SBA has certain tight restrictions. For instance, you can't take out this loan for working capital, refinancing, or paying off debts. But you can use this loan in the following ways:
- In buying land
- For expanding, renovating, and adding new facilities
- To provide parking facilities
- To buy equipment and machinery
- Landscaping
About the Author:
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