Home > Financing > SBA Loans

SBA Loans for Small Business - Page 1

The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.  The SBA recognizes that business is critical to our economic recovery and strength, to building America's future, and to helping the United States compete in today's global marketplace. Although SBA has grown and evolved in the years since it was established in 1953, the bottom line mission remains the same. The SBA helps Americans start, build and grow businesses. Through an extensive network of field offices and partnerships with public and private organizations, SBA delivers its services to people throughout the United States, Puerto Rico, the U. S. Virgin Islands and Guam.  (www.sba.gov)

The SBA does not lend money in its own name but instead partners up with local, regional and national lenders and guarantees the loans that they make to small businesses nationally.  For this guarantee the SBA charges a fee paid by the borrowers and the bank in turn gets an assurance from the SBA that a part of their loan proceeds has a backstop from the federal government.

The loan programs offered by the SBA are:

Section 7 (a) programs
Section 7 (a) of the small business act established this program to provide loans to American small businesses.  All loans under this program are provided by lenders who are participants with the SBA.  There are also a few non-bank lenders who participate in this program.  These loans are made directly by lenders and the SBA only guarantees a part of this loan in the event of default.  The ability of the borrower to repay the loan is the primary focus of underwriting by lenders under this program and every owner / partner who owns more than 20% of the business has to personally guarantee the loan often offering up their primary residences as collateral to secure successful approval and funding.  It is highly recommended by the SBA that your application package include a well thought out business plan that

504 programs
The 504 program was set up to provide long term financing for economic development within a community.  The 504 program provides growing businesses with long-term fixed rate financing solutions for the acquisition of fixed assets such as land and buildings.  It is a very common program used in the Hotel and motel industry where the business owners / partners are looking to buy the real estate and run it themselves.  504 programs are set up when a lender partners up with a CDC (Certified Development Company).  There are 270 odd CDC’s nationally and each covers a specific geographic area.

1  2  Next  >