Running a small business can be rough. However, the U.S. Small Business Administration loans are here to help. You have all these ideas to make it grow but we all know that ideas often come with a price.
Funds are among the biggest struggles of small business owners. Unless you have a hefty amount of cash to work with, your next best bet is to borrow or ask for assistance. This is where organizations such as the U.S. Small Business Administration (SBA) come in.
What is the SBA?
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The Small Business Administration (SBA) is a government agency that works autonomously. Since its foundation in 1953, the U.S. SBA has been providing assistance to small businesses and startups through training, loans, loan guarantees, and contracts. As well as other forms of aids that will help these businesses grow.
There are dozens of localized SBA offices throughout the country and other associated territories that provide such services particularly counseling and loans.
Found on their website is a plethora of tools, information as well as other details that point small businesses in the right direction.
SBA loans are arguably the most visible service the agency is known for. Since a lot of small business owners can’t afford to fund their ventures alone, this is where SBA comes in, but always with guidelines and limitations.
What are Small Business Administration Loans?
Whether you’re looking to refinance an existing loan or need financial aid to open a new branch or hire more workers, loans are an ideal way to get you started.
SBA loans are granted by SBA and issued by lenders, particularly banks affiliated with the agency. According to the U.S. Small Business Administration, their maximum loan grant amounts to $5 million. More commonly, the agency guarantees well up to 85% of loans for $150,000 or less and 75% of loans for the excess of $150,000.
How Do I qualify for an SBA loan?
Just like other entities, SBA requires small businesses to meet their standards in order to qualify for a loan. The agency can be quite strict. That’s why it pays to make sure that your company counts and that you’ve covered all ground before approaching them.
Here’s what you need to qualify for an SBA loan:
1. You were turned down for private financing
Before you approach the SBA, banks and other financial institutions should’ve previously turned you down for private funding.
2. You must meet the “small business size” requirement
SBA accounts for various factors in order to qualify you as a “small business”. For instance, they could look into your annual receipts or consider the number of workers you have, which shouldn’t exceed 500.
3. You must meet lender qualifications
Once you meet SBA qualifications, you then need to apply for a separate loan to financial institutions affiliated with the agency. Jim Anderson, a management counselor for Orange County SCORE as well as a former management consultant for Honeywell and Ford Motor Co. explains: “The SBA has designated some lenders as ‘Preferred Lenders’ that can approve loan requests on behalf of the SBA, which may expedite the loan process.”
Often, the road to getting aid from the U.S. Small Business Administration is painstaking. In fact, we advise that you pocket a wealthy amount of patience throughout the application process. When you do get approved, you’ll finally have the finances to make your business grow without digging yourself a hole too deep for you to crawl back up afterward.