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SBA Loans

The Small Business Administration (SBA) was started in 1953 by the federal government as an independent agency help, 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. The SBA helps Americans start, build and grow businesses via an extensive network of field offices and partnerships with public and private organizations, SBA delivers its services to people throughout the United States, Puerto Rico, the U. S. Virgin Islands and Guam.

Many existing large companies started out with help from the SBA which include Stapes, Sun Microsystems, Apple, Jenny Craig, outback Steakhouse, Cray Research, Calloway Golf, Intel, Costco, Ben and Jerry’s, Nike, America Online and FedEx. (See video of the SBA Introduction below).

Getting a Loan

The SBA participates in various low-interest loan programs for business owners who may have trouble qualifying for a traditional bank loan.  To start the process of getting a SBA loan, you must visit your local bank or lending institution that participates in SBA programs.  SBA loan applications are structured to meet SBA requirements, so that the loan is eligible for an SBA guarantee.  This represents the portion of the loan that the SBA must repay to the lender should you default on your loan.

SBA Loan Checklist

When applying for a SBA loan, you must get the appropriate documents for your application.   The SBA does not provide direct loans, so the process starts with your local lender who works within the SBA guidelines.

The SBA loan application checklist includes:
  • 1.The SBA Application
  • 2.Personal Background
  • 3.Personal Financial Statement
  • 4.Business Financials Statements
  • 5.Projected Financial Statements
  • 6.Ownership and Affiliations
  • 7.Business Certificate/License
  • 8.Loan Application History
  • 9.Business income Returns
  • 10.Personal Tax Returns
  • 11.Resumes
  • 12.Business Overview and History
  • 13.Business Lease
  • 14.Additional documents if purchasing an existing business:
    • Current balance sheet and P&L statement of business to be purchased
    • Previous two (2) years federal income tax returns of the business.
    • Proposed Bill of Sale including Terms of Sale.
    • Asking price with schedule of:
      • i. Inventory
      • ii. Machinery and equipment
      • iii. Furniture and fixtures
Government Grants

The SBA or federal government does not provide grants for starting or expanding a business.  However, federal grants are available for non-commercial organizations, such as non-profits and educational institutions specializing in medicine, education, scientific research and technology development.  The federal government also provides grants for local and state governments to assist with economic development.

Some business grants are available via local and state governments, non-profit organizations and other groups.  For example, some states offer grants to expand existing child care centers, developing energy efficient technology and developing marketing campaigns for tourism.  These grants are not free and normally require the recipient to match funds or combine the grant with other financing.

Venture Capital

Venture capital (VC) is a type of financial capital that funds early-stage, high-potential startup companies.  Venture capital investments are typically made as cash in exchange for shares and an active role in the invested company.

The SBA offers The New Markets Venture Capital (NMVC) program that seeks to stimulate economic development in Low Income (LI) areas. Through public-private partnerships between the SBA and newly formed NMVC Companies (NMVCCs) and existing Specialized Small Business Investment Companies (SSBICs).

The SBA also offers the Small Business Investment Company (SBIC) Program providing venture capital to small businesses. Although SBICs are licensed and regulated by SBA, they are private, profit-seeking investment companies.

Finding Loans and Grants

Local, state and the federal government offers a wide range of financing programs to help small businesses start and grow.  The program includes low-interest, venture capital and economic / scientific development grants.

You can use the Business.gov’s Loans and Grant Search tool at http://search.business.gov/startLoans.html to get a list of financing programs that you may qualify for.

For more information about the SBA visit http://SBA.gov.
 
Other SBA Services

The SBA is an excellent resource to helping you start a business.  Not only does the SBA offer loans, but they can help you with getting a mentor, writing a business plan, purchasing a business or franchise, leasing equipment, protecting your idea and a host of other services.

Additionally, if you own a business the SBA can help you to make decisions, manage employees, market and sell, pay taxes, get insurance, forecast, finance growth, etc.  The SBA can even help you to eventually sell your business, transfer ownership, liquidate assets, and file bankruptcy.

Some of the most requested items from the SBA are getting a business loan, business grant, business license, tax identification number, business certified as woman or minority owned, etc.

 

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