The Small Business Administration (SBA) is not a lending institution. They offer diverse loan programs that are set up to provide financial assistance to small businesses. The SBA is primarily a guarantor of loans that are made by other lending institutions.
The SBA works in partnership with various lenders and will guarantee between 50 and 85 percent of the loan for qualifying businesses. Lenders can be found nationwide, but must follow the structured guidelines set by the Federal Government. As with any loan, borrowers must still provide history and figures on their company and most importantly, information on how they intend to pay back the loan. Filling out all of the paperwork accurately is the main hurdle to overcome. Once you have had a history of these loans, it just becomes one more experience of doing business.
Although any type of business may apply for an SBA loan, they are not for every business and sometimes they are denied. The SBA has the right to refuse to guarantee a loan if their internal criteria is not met. All businesses must be for profit, non-religious, non-discriminating and legal. About 10 percent of applications are turned down each year by the SBA.
Check back on this blog for information on specific loan programs offered by the SBA.
