SBA Loans
One of the biggest parts of starting a business is figuring out your financials. The SBA (Small Business Administration) has developed a variety of programs for small business, all of which are meant to help organizations get up and running.
Although the SBA does not directly lend money to small businesses, they still play a big role in the financing and growth process. When you apply for an SBA loan at a local credit union or bank, you are requesting that the SBA provide a guarantee to the lender that you will repay the money as promised.
SBA Loan Programs
The SBA offers a variety of loan programs – each one intended for a specific purpose. Consider the following programs:
- 7(a) Loan Program. This program provides financial assistance to businesses with special requirements. For instance, funds are available for those that operate in rural areas or deal with foreign operations.
- Microloan Program. This program provides small, short-term loans to businesses and non-profit child care centers. Funds can be used for the following: working capital; purchase of equipment; purchase of supplies or inventory; and the purchase of fixtures or furniture.
- CDC/504 Loan Program. This long-term financing program is designed to promote economic development by offering fixed rate financing for the following purposes: to purchase land or existing buildings; construction of new facilities; and to purchase long term equipment and machinery. Economic community development is the primary goal of this program.
Note: the bank you choose can explain each SBA option while offering advice on which program suits you best.
SBA Loan Application Process
The SBA loan application process does not have to be intimidating. When you know what you are doing it is much easier to complete the application process and improve your chance of success.
The following documentation is needed in order to apply for an SBA loan:
- SBA loan application
- Personal background statement
- Personal financial statement
- Business financial statements
- Projected financial statements
- Ownership and affiliations
- Business certificate and/or license
- Loan application history
- Business income tax returns
- Personal tax returns
- Business plan
If you need a loan to start or expand your business, the SBA may have a program for you.
