SBA loans for Small Business owners

Posted on by Kriti

The U.S. Small Business Administration (SBA) can play a very important role for entrepreneurs who are planning to establish or expand their business but are lacking the needed financial resources.  Even though small business owners will not get loans directly from the SBA, a SBA-backed loan application at a lending institution will add weight to your request because by doing so, SBA is virtually agreeing to be your guarantor. In general, without mentioning any particular U.S. State, the following are some of your options with regard to getting financial help from the U.S. Small Business Administration:

Loan Programs

SBA Basic 7(a) Loan Program
7(a) loans are the most basic type of Small Business Administration’s business loan programs for initiating, purchasing or expanding a small business. Those who wish to avail of the 7(a) Loan Program will have to make their application through a participating financial lending institution.

Small business owners are constantly in need of finance to meet their short-term and seasonal working-capital requirements. CAPLines is an all enveloping program through which the SBA helps small businesses fulfill such needs.

Community Adjustment and Investment Program (CAIP)
The North American Free Trade Agreement (NAFTA) while having its positive sides also had its negative ones as well, particularly with regard to some businesses in some areas of the country. To offset this, the Community Adjustment and Investment Program (CAIP) was established to assist U.S. companies doing business in such areas. Loans made available through CAIP allow for the borrower to reduce costs and increase the availability of other existing programs under the SAB such as the Basic 7(a) loan programs.

Community Advantage
Most of the time, small business owners require moderate amounts of finance and this is the purpose of the Community Advantage and Small Loan Advantage programs which can enable small business owners to get loans under $250,000. Among other things, availing of the Community Advantage and Small Loan Advantage program requires minimal paperwork since the application process is streamlined. It also has a fast turnaround time along with SBA’s highest guarantee. As stated before, these funds are not available directly to small business owners but are channeled through participating financial institutions.

Community Express
Meant for small businesses in low and moderate income areas, Community Express is a SBA pilot, 7(a) loan program that allows lenders to avail of up to $25,000 loan without putting up collateral. However, if the lender requires more loan, then their existing collateral policy can be used for loans up to $250,000.

Microloan Program
This program is meant for newly established and start-up small businesses as well as for small businesses that are growing. The loan amount is small (maximum of $35,000) which is made available through non-profit community based lending institutions.

Military Reservists Economic Injury Loans
As is obvious from its name, this is a program to provide funds to small businesses in which an essential employee has been called up for active duty in his/her role as a military reservist. It basically is to help small businesses meet their day-to-day operating expenses.

ACCION USA Small Business Loans
            This program is primarily to assist small business owners who might not have easy access to business credit in the traditional sense and is directed particularly towards women and minorities. Loans are flexible and up to $50,000

Self-Help—Financing for Small Businesses and Non-Profits
Again, this program is also for those small business owners as well as non-profit organizations who might find it difficult to get business credit in the traditional way.

To conclude, there are a fair number of opportunities to avail of a SBA-backed loan for small business owners and it would be a good idea to study them and see which one suits you best to meet the short term but crucial financial needs of your small business.

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