The U.S. Small Business Administration (SBA) is designed to fund loans that small businesses loans may need for a variety of different reasons. However, the SBA does not actually provide the money; rather the organization provides the guarantee that the debt will be repaid to their partners.
The SBA website offers overviews of loans that entrepreneurs may use to start their businesses. The most common loan is the 7(a) loan. Here is some information regarding this loan:
- Eligibility: Operate a for-profit, small business (by the SBA’s terms of small). The business must reside in the United States or its territories. Applicants must demonstrate need for the loan and must have used other resources first. Applicants may not have delinquent U.S. government debt.
- Use of proceeds: Loan recipients must use the funds to establish a new business, purchase equipment, pay operational expenses, refinance existing debt, etc.
- Repayment terms: Based on the recipient’s ability to pay and other determining factors, repayment could range from seven to 25 years.
- Fees and interest: Maturity fee and fixed or variable interest rates will be negotiated.
- Loan application checklist:
- Loan application
- Personal background and financial statement
- Business financial statement
- Profit and loss statement
- Projected financial statement
- Ownership and affiliations
- Business certificate/license
- Loan application history
- Income tax returns
- Resumes, business overview and history
- Existing business information if purchasing an existing business
- Processing time: 36 hours.
- Types of 7(a) loans: Several types are offered.
Visit the SBA website to review the complete information regarding available loans, specific guidelines and requirements available for your business needs.
With all of the information provided by the SBA, entrepreneurs have an enormous opportunity to get their start-up loans funded and to repay them with fair and reasonable terms. Visit the SBA’s website, make inquiries about what you want to know, gather your documentation, apply for the loan and begin your success story.