It is easy to see that small businesses play an important role in the development and growth of a country’s economy. The federal government is aware of this simple fact. Thus, the government has organized the Small Business Administration or the SBA to lend a helping hand to small businesses in the United States. The SBA was launched in 1953 in accordance with the Small Business Act.
It is important to realize that the SBA does not directly grant cash or business loans. The SBA was created to help small businesses whose loan applications have been rejected by banking institutions or private lending companies. If you have already tried to apply for a work loan but your request has been refused, you can contact the SBA and ask for assistance. Subsequently, the SBA would be the agency to work with you in choosing the right loan provider who would be ready to give you the necessary loan.
There are several commercial loan programs accessible through the SBA. These are the loan guarantee program for growing new businesses; the 504 program of financing fixed assets for business construction projects and land purchases; the MicroLoan program which amounts to $ 35,000; the economic development program that offers free advice and low-cost training; and 8 (a) – Business development program for entrepreneurs considered socially and economically disadvantaged.
SBA loan restrictions
The approval of your loan depends on four factors: the type of business you have, the size of your business, your goal to borrow funds and special conditions. To obtain approval, the applicant should be the owner or should have invested a considerable amount in the company. It must be a small business, which means it must be owned individually and dominant in size. Loans to companies can be used for the purchase of company equipment, shares, real estate, restructuring or working capital. Special conditions apply to business franchises, clubs, farms, fishing boats, schools, etc. The SBA has specified rules and regulations in case the company does not meet the requirements of this category.
An SBA loan can not be used to repay current debts or outstanding taxes. In some cases, a small business can be approved if it can show that refinancing will be beneficial to the organization and that debts are not the direct result of uncontrolled spending or financial mismanagement.
Who else is not qualified to get an SBA loan, Some types of selected companies are disqualified and are companies with a dubious foundation or suspected of carrying out illegal activities. Gambling companies, pyramid schemes, lending activities and real estate investments are just to name a few. Even religious and non-profit organizations are not qualified.
To sum up, keep in mind that:
– to be considered for an SBA loan, it should first be refused or refused by a commercial commercial lender; – the SBA will not directly issue cash loans but co-ordinates with service providers and financing companies on behalf of small businesses;
– to get approval, a small business must be able to approve SBA policies and guidelines for small businesses.
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