If your small business is seeking out lending sources to provide loans or other support for your business, then consider the SBA. The SBA is the Small Business Administration that facilitates lending to businesses that are growing and looking to expand their business. However, you should educate yourself on what an SBA loan is, who qualifies, and suggestions for receiving this source of financing.
Lending Services and Guarantees Loans
An SBA loan is provided by an agency that is federally funded by the US government. However, the SBA provides more than just lending assistance, they also provide advice and other information for businesses to grow larger and be more successful. Although the SBA helps you with lending services and guarantees the loans you receive from banks or other sources it does not make loans itself. This is important to know because most people believe the SBA makes federally funded loans to small businesses when in fact the SBA simply guarantees loans from other sources. The reason SBA lending programs are helpful to small businesses is that the SBA guarantees the loan for the business when the business does not quite meet the bank’s loan criteria. So, the SBA steps in and helps the business receive traditional funding. Although, the SBA does not guarantee 100% of the loan because it expects that the company put something up front as well.
So, if you are a business that is currently doing well in the business world and simply want to grow your business then you might qualify for lending assistance from the SBA. However, you do need to have credit in order to do this because there will be a credit check. There are no rules that say only companies with excellent credit histories will receive lending assistance from the SBA. This is because the SBA works with companies that do have slightly less than perfect credit histories. However, if your company has really bad credit then more than likely the SBA will not be interested in helping you with lending assistance. Also, there are different programs that focus on new businesses, growing businesses and businesses making investments to name a few.
Applying for assistance from the SBA to guarantee a loan for you is the best plan of action when you are able to contribute financially to the growth of your business as well. SO, if your company is currently experiencing a growth spurt and you have money to invest that will cover the amount of the loan not guaranteed by the SBA, and then you are a good candidate. However, if you have no personal assets or money to secure the loan for your business then the SBA will not be able to help you.
The best thing to do is to conduct some research of your own and set up a phone meeting with a representative from the SBA to answer all of your lending questions so you will know where your personal business stands. By doing this you will have personalized answers and know up front everything you need to know about SBA lending and your company.
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