SBA Loan

The SBA is the Small Business Administration which was established in 1953 after the Small Business Act was introduced. It was established to aid, counsel, assist, and to protect the interest of the small business. Their programs now include financial and federal contract procurement assistance, management assistance, and specialized outreach to women, minorities, and armed forces veterans. They also provide loans to victims of natural disasters and those needing advice and assistance in international trade. The loan programs are considered part of their financial assistance to entrepreneurs.

The SBA not only guarantees loans and also lends money under certain circumstances but they also assist entrepreneurs in making the right management decisions. They help by assisting entrepreneurs in forecasting the future of their business, planning for that future, and managing employees to reach that future goal. They also help in cultivating leadership qualities in managers and entrepreneurs. They help teach leadership traits, professional development, and business ethics. They also help entrepreneurs pinpoint marketing opportunities as well as assisting in showing them how to use today’s technology for their business. The SBA has a program for all walks of life including young & old, women & minorities.

The SBA has a basic loan guaranty program called the 7(a) loan guaranty. This program helps small businesses obtain loans that they normally would not obtain. The SBA guarantees that the lender will receive most of their money back if the business defaults on the loan.

Lenders can become Certified Lenders by showing that they have the ability to process, close, service, and liquidate loans. They must also have a satisfactory history with the SBA, an acceptable SBA rate, and have shown the ability to work well with the SBA. In return the SBA promises a fast loan decision. The proceeds of the loan can be used for any business purpose. If the loan is for working capital then the maturity is 10 years and if it is for fixed assets then the maturity is 25 years.

Another loan program is the Certified Development Company program which is also called the 504 loan program. This program allows businesses to purchase real estate, machinery, or equipment for the purpose of expansion or modernizing the business.

The Micro loan is a very popular loan program for those who need up to $35,000. This loan can not be used to purchase real estate or to pay existing debt and they are not guaranteed by the SBA. The Low Doc program is a loan program in which the lender doesn’t require as much paperwork as with other traditional loans.

Loans in this category are primarily for exporters and those who mostly do business in foreign countries. The Export Working Capital Program is one of these programs and provides short-term working capital for exporters. The SBA encourages the lending of capital to these types of companies by guaranteeing the repayment of up to $1.5 million or 90% percent of the loan amount, whichever is less. The SBA Express provides those businesses with potential in being good companies to export goods but who don’t have the funds to purchase goods or to produce them in house. Loan proceeds can be used for expansion, producing of goods, and to service contracts. The loan proceeds must be used in a way to show expansion or improvement of the company.

The Gulf Opportunity Pilot Loan Program is a loan program designed to expedite small business financing to those communities that were severely affected by hurricane Katrina and Rita. The businesses may already be located in these areas or they plan to relocate to these areas. The maximum loan is $150,000 and the loan guaranty is 85%. All SBA Express lenders are approved in this program without any further approval needed. Lenders use their own paperwork and procedures and they must also perform credit analysis and can use credit scoring if needed.

There are also Contract Surety Bonds that are most useful for contractors and the project owners. This bond insures that the contractor lives up to his part of the contract and if the contractor can’t live up to his part of the contract, the surety steps in to make sure the contract is fulfilled.

The SBA also has an 8(a) Business Development program as well as a Small Disadvantaged Business Certification Program. These programs offer a range of assistance to socially and economically disadvantaged firms. Participants can receive contracts totaling up to $3 million for goods and services and $5 million for manufacturing. Businesses can also perform joint ventures and teams to bid on different contracts. Those looking to qualify must be owned and controlled by a socially and economically disadvantaged group. These groups include but are not limited to African Americans, Hispanic Americans, and Native Americans. Others can be admitted if they show through evidence that they are also disadvantaged due to race, sex, color, physical handicap, or residence. All individuals must also have a net worth of less then $250,000, be in business for at least two years, display good character, and display reasonable success potential.

Almost all businesses start with an idea. This idea can be new or can improve upon something that is already out there. It is not always necessary to start a business from the ground up. There are franchises out there that already have a business plan and model that owners can follow that may lead to success. Once you decide on whether or not you are going to buy a business, start one from scratch, or buy a franchise then you need to determine the location of your business. Some people have started small businesses from their home in the form of a home based business then have moved it to an outside location as the business grew. Once you know what type of business you are going to start and the location of it then you need to obtain small business insurance, some small business accounting software, and some supplies to get started such as office equipment, computer, pens, paper, etc.

The SBA provides some good information and guidance on starting a business. The Micro loan is designed for this purpose. It is for start up companies as well as those that are already established. It is designed to give a business that has yet to establish them self a boost in starting their business. The loan is less strict then others and is based upon not only the credit of the applicant but also their abilities, the viability of the company, the character of the applicant, and other factors.

The SBA also provides online help in determining whether or not you are ready for starting your business. The SBA also provides assistance and templates for writing a small business plan. The first step is to write up a business plan for your idea. The small business plan is a comprehensive report of what your idea is, why it is needed, and how you plan on getting it out to your defined market. Your business plan should include research for the industry that your idea is in for example if you want to start a flower shop then you would need to show the need for one and how you plan on helping it make a profit. You must keep in mind that if your business is to thrive then you need to cover any problems that may arise.

The business plan shows how well you anticipate that you will cover these problems. The plan also shows that you are qualified to start the type of business you are proposing or that you have people to help you in the areas that you lack the abilities necessary. A business plan also shows who your management team will be, the type of company you will have (corporation, sole proprietorship, or partnership), what you plan on doing with the funds, and how you anticipate paying the funds back. They also have many forms and resources for the entrepreneur. A small business begins with the business plan and the SBA assists in helping you pinpoint the information that you need for your business plan as well as assisting you in writing it. The SBA also provides information about buying franchises and gives further links and information so that the entrepreneur can make an informed decision.

The SBA provides different loans and programs tailored for women and minorities. The SBA takes due diligence in helping women and minorities obtain business loans and financing. They try to encourage lenders to loan more money to minorities and women especially through the loan guaranty programs. The SBA along with SCORE provides information to women and minorities about business startup, purchasing, growth, and financing. Women and minorities are encouraged to open businesses and to apply for funding to open then and keep them going. Almost all of the programs can be applied for by any group or groups of people. Some programs are specifically for women and minorities. These programs provide more lenient criteria as well as less paperwork so that it can be easier to obtain a loan or funding for a business. The SBA does not guarantee that anyone will receive a loan but they try to make it easier for who normally would not qualify under traditional terms to qualify. The SBA tries to make sure that a significant amount of programs and loan funds are available for minorities and women to give them as close to an equal chance for funding as possible.

SCORE stands for Service Corps of Retired Executives and is a nonprofit organization that provides small business advice and training. SCORE uses volunteers who share their business skills with businesses. SCORE has about 16 employees and over 10,000 volunteers. SCORE provides information on lending sources and how to prepare for and get through a disaster that may befall your business. They provide plenty of how to information on starting a business, financing a business, growing a business, as well as managing your business. SCORE provides business tips and online articles that cover almost every subject imaginable. SCORE offers face-to-face small business counseling and low cost workshops. SCORE provides a variety of assistance from investigating the market potential for a product or service to assessing the amount of capital needed to start or sustain a business. SCORE is available for entrepreneurs whether they are minorities, disadvantaged, women, etc. anyone can use the assistance and guidance of SCORE.

The first step is to contact the SBA for guidance on which loan programs would be best for your type of business. The SBA can help you with this by assisting you in analyzing your needs as well as long term and short term goals. Once an amount has been placed on these needs then the SBA can point you to the right loan. Keep in mind that the SBA has loan limits and it would not make any sense to apply for a loan whose limit is considerably less then you need. However, it is more then likely a good idea to apply for more then one program using the same information but the SBA will consult you on this as well. Each loan program may have a list of lenders that participate in it and the company can choose which lender to apply to base upon rates and other information. The different loans have different applications and at times request different information. Basic information about the company is needed as well as how the company plans to repay the money. The company should also have some financial information available to show the lender a solid history and a positive future.

An applicant can also have their loan applications for $250,000 or less analyzed by the SBA before they take it to any lenders. This helps the entrepreneur to know what they need before going to a lender and asking for money unprepared. An entrepreneur may also need to write up a business proposal that will include general business information, a business description, management profile, market information, and financial information. This information is also needed when writing a business plan but may need to be formatted in a different way.

The SBA has a list of lenders they normally use for micro loans. It is important to understand that not every bank is included in this list. Banks have to apply to be on this list just like any other bank. There are regulations and guidelines on top of the normal banking regulations they must follow and adhere to. These banks are more then likely able to approve your loan then others who are not on this list. Other lenders can be preferred lenders and certified lenders. These lenders show that they can work with the SBA and have a good record for working with them in the past. A list of these lenders can be found on the SBA website. Micro lenders are those lenders who primarily make the smaller loans which are $35,000 and below. These lenders are more then likely to accept an applicant if they have the guaranty of the SBA. There are also Certified Lenders and Preferred Lenders who have proven themselves as reliable and trustworthy lenders that the SBA can go to time and time again. They also receive priority loan decisions based upon their good status with the SBA. All of these loans provide some sort of assistance and should be applied for.

So you have now started your business and it is up and running but you would like to find ways to expand it. The SBA has plenty of good information on government contracts and how to obtain them. They can also assist in applying for the loans and bonds necessary to get a government contract but they can also help assist you once you get the contract. The SBA also helps you to define your market and works closely with the different government departments to help small businesses to ease into this market. Small businesses have to undergo more hurdles to obtain government contracts and the SBA can make these hurdles a little easier. The SBA provides different websites and information to assist businesses in becoming government contractors and vendors.

The government buys almost anything and one of the largest purchasers so most businesses vie to obtain their business. This normally means stiff competition and the more help a business has the more likely it is that they will get a contract. These contracts can help the business increase revenue and hopefully provide more jobs. Providing more jobs and obtaining more tax revenue are some of the incentives for the government to try to assist businesses in every way. The government tries to help businesses in many ways such as offering business opportunities so they can increase revenue and hire more employees, offering programs and counseling to small and disadvantaged businesses, and helping businesses obtain loans and financing for startup and growth. They want your business to grow and expand. They want you to hire more employees. They want you to make a profit and hire more employees. They have an incentive for you to do these things and you should have an incentive for allowing them to assist you in doing them. The SBA is another way to take advantage of government programs and to use them to an entrepreneur’s advantage.