Which SBA Loan Program is Right for You?

by | March 10, 2009

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Determining which type of SBA loan is best for your business can be confusing. Following is a synopsis of the different loan programs backed by the Small Business Administration.

The programs include:

7(a) Loan GuarantyThe 7(a) Loan Guaranty Program is one of the SBA's primary lending programs. It provides loans to small businesses unable to secure financing on reasonable terms through normal lending channels. The program operates through private-sector lenders that provide loans which are, in turn, guaranteed by the SBA (which has no funds for direct lending or grants).

Specialized 7(a): LowDocDesigned to increase the availability of funds under $150,000 and streamline/expedite the loan review process.

SBA ExpressDesigned to increase the capital available to businesses seeking loans up to $250,000.

CAPLinesAn umbrella program to help small businesses meet their short-term and cyclical working capital needs with five separate programs.

Specialized 7(a): International TradeIf your business is preparing to engage or is already engaged in international trade, or is adversely affected by competition from imports, the International Trade Loan Program is designed for you.

Export Working CapitalDesigned to provide short-term working capital to exporters in a combined effort of the SBA and the Export-Import Bank.

Pollution ControlDesigned to provide loan guarantees to eligible small business for the financing of the planning, design, or installation of a pollution control facility.

Specialized 7(a): DELTADefense Loan and Technical Assistance is a joint SBA and Department of Defense effort to provide financial and technical assistance to small firms adversely affected by cutbacks in defense.

Specialized 7(a): Minority and Women's PrequalA pilot program that uses intermediaries to assist prospective minority and women borrowers in developing viable loan application packages and securing loans.

Veteran's Loans and Disabled Assistance The SBA has not been providided funds for direct aid to veterans or the disabled. However both groups are eligible for all SBA loan guaranty programs, and may recieve special consideration.

Qualified Employee TrustsProvides financial assistance to Employee Stock Ownership Programs (ESOP).

Microloan ProgramThis program works through intermediaries to provide small loans of as little as $100 up to $35,000.

Certified Development Company (504 Loan) ProgramThis program, commonly referred to as the 504 program, makes long term loans available for purchasing land, buildings, machinery and equipment, and for building, modernizing or renovating existing facilities and sites.

The Angel Capital Electronic Network

The SBA also offers a program called The Angel Capital Electronic Network (ACE-Net). ACE-Net is a nationwide Internet-based listing service that provides information to angel investors (individual investors who are generally hands-off and have investments in many different startups) on small, dynamic, growing businesses seeking $250,000 to $5 million in equity financing. ACE-Net, sponsored by the Office of Advocacy of the U.S. Small Business Administration, was announced by President Clinton in October 1996. It is a major effort by the Office of Advocacy to systematize, and expand, on a nationwide basis, information available to investors on firms seeking equity financing. ACE-Net is run as a private, independent, not-for-profit organization.

The SBA offers many other excellent financing, startup and consulting resources to entrepreneurs and small business owners. The best way to take advantage of these resources is to schedule a meeting at a branch in your area.

Things to think about

  • What resources does the SBA offer that can benefit your business?
  • Where is the closest SBA branch office?

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