Obtaining Small Business Loans from the United States Government
Given the number of expenses a start-up business owner has, he or she needs to get creative in order to obtain funding, especially in this economy.
Loan Programs from SBA.gov – the Small Business Administration
The goal is pretty simple—to obtain cash to fund a business. You can make more cash with long-term growth of your business being the main goal. But in order to achieve that goal, you need funding. Conventional bank loans are difficult to get for small business owners. And, given the fact that as a start up, your company most likely does not have more than three years of revenue. Banks require at least three years of revenue, in order to obtain a conventional loan.
So, what is a small business owner to do? Enter the United States Federal government to the rescue! The U.S. Small Business Administration—also refereed to as the SBA—offers a variety of loan programs for very specific purposes. If you take the time to carefully review the business loan application checklist, and if a business qualifies, you may be eligible to obtain funding for your small business from the United States government. Take a moment to review the various loan programs out there for business owners.
What is the SBA?
The U.S. Small Business Administration was founded in 1953 and has supplied millions of business owners with loans. Loan, guarantees, contracts, counseling sessions and other forms of assistance have also been provided.
The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government. The intention was 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.
Types of Small Business Loans Offered
SBA offers a variety of loan programs for very specific purposes. For example, funds are available for loans to businesses that handle exports to foreign countries. Also businesses that operate in rural areas are available for small business loans. Loans are available for other very specific purposes, such as working capital, the purchase of inventory, supplies, furniture, fixtures, machinery or equipment.
The maximum loan amount is $50,000, but the average loan is about $13,000. Proceeds from a SBA loan cannot be used to pay existing debts or to purchase real estate. If you are awarded a SBA loan, the small business loan proceeds may be used to establish a new business or to assist in the acquisition, operation, or expansion of an existing business.
There are many loan programs to consider.
- Special Purpose Loans Program – SBA offers several special purpose 7(a) loans to aid businesses that have been impacted by NAFTA, to provide financial assistance to Employee Stock Ownership Plans, and to help implement pollution control mechanisms.
- Export Loan Programs – Approximately 70 percent of all U.S. exporters have 20 or fewer employees. SBA has placed a priority on helping these small business exporters by providing a number of loan programs specifically designed to help them develop exporting business plans.
- Rural Business Loans – The Small/Rural Lender Advantage (S/RLA) initiative is designed to accommodate the unique loan processing needs of small community/rural-based lenders. This is done by simplifying and streamlining the loan application process.
- Advantage Loan Initiatives – SBA is committed to expanding access to capital for small businesses and entrepreneurs in undeserved communities so that the SBA can help drive economic growth.
- Community Advantage Approved Lenders – The following are the Community Advantage lenders approved by SBA:
- ACCION San Antonio, TX
- Appalachian Community Enterprises Cleveland, GA
- Appalachian Development Corp Greenville, and
- SC Black Business Investment Fund.
- Express & Pilot Programs – SBA’s Express and pilot programs offer streamlined and expedited loan procedures for particular groups of borrowers, notably active duty military personnel, veterans, and borrowers from distressed assets.
Who can apply for small business loans through the SBA?
SBA has programs and resources for everyone, regardless of age, gender, race, and financial status.
- Native Americans – If you are a Native American seeking a certification for your small business, look no further than the Indian Affairs’ Division of Economic Development. The Division of Economic Development helps tribes foster strong reservation economies.
- Women – The Small Business Act authorizes contracting officers to specifically limit, or set aside, certain requirements for competition solely among women-owned small businesses (WOSBs). Economically disadvantaged women owned small businesses are encouraged to apply.
- 50+ Entrepreneurs – Are you tired of punching the clock for someone else? Do you think you can’t find another job at your age? Are the kids out of the house, freeing you to re-enter the job market? Are you nearing retirement, but don’t know what you will do? For many older entrepreneurs, starting a small business can be an opportunity to transform a lifetime hobby into a lucrative line of work. Examples include fishing, investing, writing, or photography.
- Minorities – SBA is a strong advocate of minority and special audiences. We know doing business with the government, also called government contracting, can be a very lucrative endeavor for small businesses.
- Youth Entrepreneurship – Young people of today are the entrepreneurs of the future. The SBA has developed a Teen Website designed to introduce young entrepreneurs to the concept of small business ownership as a viable career.
- Veterans – If you are a veteran or a service-disabled veteran, there are many opportunities for you and your small business. It is important that you certify your small business as Veteran-Owned or Service Disabled Veteran-Owned. This way you can take advantage of the veteran programs.
Regardless of where the SBA staff is located, their commitment is universal. The SBA commitment is to help Americans start, build and grow businesses. Regardless of where the small business is located within the United States, there are many options available for funding.
Local offices are available to assist you in obtaining information and planning for an application for a SBA loan.
What about your business website needs?
You might need to start a business website to check off all the business questions on your application. Website hosting firms that are professional, experienced and low-cost are not easy to find. The low-cost part is, but professional as in “green hosting” is not something that is really easy to find. Yes, there are many web hosts that pretend to be green. But be sure to check their resume before selecting them as your online parter.