If you’re planning to start a business or expand an existing one, and didn’t have the good sense to be born wealthy, you probably need help scraping together enough money to get underway.
The U.S. Small Business Administration (SBA) is a federal agency that provides loan guarantees and other support to encourage small businesses. SBA loan programs are designed for business owners who may have trouble qualifying for a traditional bank loan.
SBA loan applications are structured to meet SBA requirements so that the loan is eligible for an SBA guarantee. This guaranty represents the portion of the loan that SBA will repay to the lender if you default on your loan payments. The guarantee allows the lender to accept a greater risk in funding a small business that may not meet conventional small business lending requirements.
SBA borrowers typically don’t have to make as big of a down payment and get more time to repay the loan than with conventional business financing. This means a fledgling business has more free cash for operations without being hampered by onerous debt service obligations.
3 SBA Programs for New or Expanding Businesses
SBA loans are offered in three programs for new or expanding businesses. If you’re ready to take the next step for starting your business in Oregon or Washington, it’s good to be prepared. Below are the 3 available small business loan programs.
• Basic 7(a) Loan Program
Eligible borrowers can use the 7(a) loan program, which is the most basic and widely used SBA business loan, to start, buy or expand a small business.
• Certified Development Company (CDC) 504 Loan Program
The CDC 504 loan program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.
• Microloan Program
The microloan program offers very small loans to start-up, newly established or growing small business concerns. SBA makes funds available to nonprofit community-based lenders which, in turn, make loans to eligible borrowers in amounts up to a maximum of $50,000.
Startup/Business Advice from James M. Hillas, P.C.
Starting a business or expanding your existing business is an exciting prospect, full of potential risk and reward.
If you have good credit and are looking to start or expand a business, you may consider whether an SBA loan is feasible for your situation.
If you’d like startup business advice from an experienced legal expert, reach out to James M. Hillas for a free consult today!