Government backed small business loans is an avenue that business owners should look at. This is contrary to the popular belief that government loans require more paperwork and they are more expensive.
Small Business Administration (SBA) of US is into offering number of financial assistance programs for the growth and expansion of startup and emerging businesses. The SBA grants are usually loans with low interest, venture capital and economic development grants. Private sector mainly comprises of the lenders but it is only the SBA that guarantees lending institutions on the loans made to small businesses.
It is not always easy to finance small businesses as it requires lot of capital. Most of the lenders are banks and non financial institutions. The private lenders mostly are found to be familiar with the programs offered by SBA. Primary loan program as offered by the SBA includes:
- The 7(a) loan guarantee program that offers loans up-to $2,000,000 and the loan guarantee extends up to $1,000,000.
- Microloan Program – This is an ideal program for new comers in business world. This program offers loan up-to $35,000. This loan is mostly found from non-profit community based lenders.
- Certified Development Company (CDC) is a long term fixed rate financing of small businesses. This 504 loan program provides capital for real estate or machinery so as help small businesses expand themselves.
- Disaster Recovery Loans – This program is intended to help out people who are been hit by a disaster and such people can find loans if they happen to come from a disaster hit area.
A solid personal credit rating can enhance one’s chances of finding a loan.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to