Government (SBA) Loans: Are You Eligible For It?


There are different loans available to businesses, and one of them is the SBA- the government-backed loans. Getting this kind of loan is not easy, especially when your business doesn't meet the requirements. The process may be long that you may be tempted to give up. After you get the government loan, paying back is easy because of its friendly repayment conditions. A US government agency known to give out government loans is the SBA- Small Business Administration. SBA gives out loans to support small businesses, as well as entrepreneurs by giving them the necessary capital.

The government agency usually doesn't give the business the loan technically. Banks give the loans to the small businesses, but the government agency guarantees the loan and promises to pay back if the small business defaults. This then gives the banks the assurance that they will not lose from approving the loan.

Why Your Business Needs That SBA Government Loan?

The US-run SBA has given small businesses the opportunities to have access to funding, especially since lending institutions are wary to lend out money on their own. It should be stated that small businesses can only seek for loans from SBA when other options for accessing funding proved ineffective.

A lot of companies that occupy the Fortune 500 ranking in the United States were once benefactors from SBA program. Some of them include Federal Express- FedEx, Intel, Apple, and lots more. The success of these organizations has made SBA and its lending partners to improve greatly on their loan programs for small businesses.

Companies Qualified For SBA Guaranteed Loans

The US SBA official page describes those businesses that are eligible for the loans as those, operating for profit, with plans to carry out their business activities in the US, while possessing a great size of the equity, and have tried out alternative financial options before opting for SBA backed loans.

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The business must also be qualified under the Small Business Act as a small business. The Act views a small business as one that is owned independently, and not dominant in the niche it occupies.

Out of the numerous fields in the business world, Franchisees are more favored than others by SBA. This is because they have a greater success rate than other businesses.

Before SBA grants the loan to a franchise, it first crosschecks the franchisee’s franchise agreement. If it is seen that the franchisor holds a lot of control over the franchise to the extent that it is seen as an employee, the loan will be turned down by SBA.

Different Forms Of The SBA Small Business Investment Loans

There are various kinds of the Small Business Investment loans that are grouped in the 7A SBA backed loan program.

They include:
The Defense Loan and Technical Assistance Program - DELTA
ITL- International Trade Loan
The Export Working Capital Program
The Low Documentation Loan
Pollution Control Program
Disaster Assistance Loans
The 504 CDC Program

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