How to Get a Loan for Your Business from the United States Small Business Administration

What is United States Small Business Administration ?

It is a US government agency. Which financially helps new entrepreneurs? It strengthens the US economy by financially helping small businesses. It also helps those people who have suffered disaster.

The SBA was formed in 1953 by Republican President Eisenhower. Along with this, he also implemented the Small Business Act. In 2020, the Donald Trump administration saved 50 million small business jobs through a payment protection program.

SBA Loan Program

7(A) Loan

7(A) SBA is the most common program and it is best for real estate. According to the SBA, this purchase can be used for furniture, fixtures and supplies, refinance current business debt, short and long term working capital. You can take a maximum loan amount of $5 million according to this plan.

Eligibility for this depends on your business income, credit history and where your business is located. If you need this loan, you should consult with your lender. He will recommend you the right loan according to you.

504 Loan

504 loan program is given for business growth and job creation. It is long-term. Under this, $5 million is given at a fixed rate. You can also take it through certified development companies. Certified development companies are regulated by the SBA only.

You must have assets of less than $15 million to get this loan. Along with this, your average net income should be less than 5 million dollars. Along with this, you should have a for-profit company and that company should be from the United States of America.

You can use 504 loan to buy long term machinery and equipment. Along with this, you can also construct existing building or buy land. But it cannot be used to repay the loan and working capital and inventory. Along with this, investment in rental real estate also cannot be done.

Micro Loan Program

Under the micro loan program, you can take a loan from $13000 to $50,000. Its main purpose is to provide loans to intermediate lenders. Which is a non-profit organization.

You can use Micro Loan to Rebuild, Reopen, Repair, etc. for your small business. Such as working capital, supplies, furniture, fixtures, machines, equipment etc. However, you can’t use it to pay off your debt or buy real estate. Along with this, SBA also gives you the opportunity to match the lender according to you.

You will first have to answer some questions within 5 minutes for the lender. Which will be about your business. After that you will get a mail. In which the information of the lender will be there.

Which will show the interest in your loan. Then you have to talk to the lender regarding compare rates, terms, fees. After that you have to submit the loan application. Also some paperwork will have to be done.

Along with this you should also keep yourself ready. As such you should have a business plan. So that you can explain your business plan to the lender. Along with this, you should also know, how much capital you need. How will you use this capital in your business?

Lenders determine credit risk and interest rate by looking at your credit score. Along with this, you should have an understanding about the finance of your business under financial projection. You should know how you will use the fund. How will you repay that loan?

Investment Capital

Under investment capital, you also get a loan from a small business investment company. These are private companies. Which are regulated by SBA. It invests in small business in the form of debt and equity.

SBIC invests in small businesses through private funds. SBIC gives debt at any interest. Which the business has to pay back. SBICs take ownership shares through equity in the business.

Disaster Loans

The SBA offers Low Interest Disaster Loans to people who are affected by the disaster. Which helps people in business. Under this, businesses of every size whether it is small or big, whether they are located in any area, where the disaster has occurred. They get this loan.

You get four types of disaster loans. First physical damage loan, second mitigation assistant, third economic injury disaster loans, fourth military reservist loan.

Recovery Hub

Recovery Hub helps small businesses to rebuild. Under this, when health crisis, disaster comes, then it helps. It also helps in keeping the employees safe and healthy. In this, under Recovery Essentials, you get funding option and counseling helps you. How do you overcome economic disruptions? Which is caused by a pandemic?

Business Resilience

You are given training under Business Resilience. That you are informed about market changes like development of new business models, e-commerce, international trade and supply chain disruptions etc. Under the underserved communities, which are small businesses of the minority. Programs are run to develop them, so that they can grow more. Create jobs for your community.

Surety bonds help small businesses to secure contracts. Because they guarantee the completion of the customer’s work. Public and private contracts require surety bonds. Which are provided by the surety company. The SBA also issues surety bonds. Which help small business a lot.

The SBA gives grants to small businesses. So that entrepreneurship can be promoted. If your business does scientific research and development. So you will be given federal grants under the Small Business Innovation Research and the Small Business Technology Transfer Program.

To promote scientific research. Under the Management and Technical Assistant program, Management and Technical Assistant and Guidance are provided. SBA loans are available through banks, credit unions and lenders.

What Does the Small Business Administration Do

It is a government agency that provides assistants to small businesses. At the same time, it helps them financially. Along with this, it promotes scientific research and development. It also promotes women entrepreneurship by providing them loans. It also helps small businesses to get contracts, through surety bonds.

Through this, the minority and other backward classes also get loans. So that their small business gives jobs to the people of their own community. This agency plays a very important role in the US economy.

The SBA’s annual budget is provided by the federal government. SBA loans are provided through finance institutions. Not that he himself gives the loan. The money received by the federal government is used by the SBA for salaries, loan programs, and administration.

SBA Services

Fund

SBA financially supports small businesses. He gives microloans and small loans to these businesses. These loans are given by the lender or financial institution. These loans to small business help a lot in growing.

Contract

SBA helps a lot in getting contracts for small business through surety bonds. The SBA holds 23% of the government contract dollars. So that he can help small business. 5% of this is given to women. So that she can grow her business.

Entrepreneurship Program

SBA provides counseling services and training programs to small businesses. These programs are held in different locations of America. These mentor programs train new and old business owners.

Advocacy

The SBA protects the interest of small businesses across the country. Simultaneously, this agency advocates the interests of business owners at the state and federal government levels. so that their interest can be protected.