Small Business Association (SBA) is a government organization which has a branch in every state. Its purpose is to provide financial assistance to small businesses in terms of loans, loan guarantees, contracts, counseling sessions and other forms of assistance.
SBA Business Loan caters to the needs of small businesses which are to be started or which are undergoing financial crises during its runtime. Apart from providing financial aid, it also teaches business tips and advice on how to keep the business in good shape as well as when and where to make sound investments and take productive decisions.
Founded on July 30, 1953, SBA has been substantial in the encouraging and development of small businesses.
In order to acquire SBA Business Loan, one needs to follow certain regulations specified by SBA. It is important to make sure that one is aware about the role that will be played by SBA in the whole transaction as well as the lender who will be providing the loan. There are three primary loan programs provided by SBA as below:
- 7(a) Loan Guaranty Program
- Certified Development Company (CDC), a 504 Loan Program
- Microloan Program
One needs to understand each of them before applying for the type of program that will suit his/her business. In certain SBA Business loans, the lenders are from public or social sector while in some they are from private sector. In this process, SBA takes guarantee for the loan which means that it will pay the amount if the borrower fails to repay loan. Being a government body and having its salient features, many lenders readily provide loans through this process and thus small businesses get a boost.
How to apply for a SBA Business Loan?
The first step is to understand what the nature of business need is. Whether one is eligible to get the loan or not? There are certain Credit factors which are to be well understood and analyzed. It includes Equity Investment that the business can make, Earnings Requirements, Working Capital that the business can spare, Collateral which can be converted into assets and Resource Management that it is capable of.
Once that is done it is important to mention the type of business plan that one has and how different or unique it is than the other ones in surrounding area. Emphasis is also on mentioning important milestones like proposed date to start as well as the list of suppliers and potential customers which are expected.
The loan proposal has to be submitted with supporting documents as per below checklist:
- SBA Business Loan Application
- Personal Background and Financial Statement
- Business Financial Statements
- Ownership and Affiliations
- Business Certificate/License
- Loan Application History
- Income Tax Returns
- Business Overview and History
- Business Lease
SBA Business loan is a boon when one wants to start up a business of his/her own. It not only provides financial assistance but also gives a boost to become independent and excel.