The Small Business Administration (SBA) is a government agency that has been helping American small businesses since its inception in 1953. Its mission has always been-according to its official website-to "aid, counsel, assist and protect, insofar as is possible, the interest of small business concerns". The agency provides counseling services to small business owners, assisting them with a variety of issues and preserving free enterprise for the health of our nation's economy. One of the primary benefits it offers to businesses is its SBA lender sservice.
While the SBA does not loan money itself, it does guarantee portions of loans for small businesses. To take advantage of SBA lenders, a business owner would contact a lender like a bank or other financial institution to find out what they need to start the loan approval process. Documentation will vary from lender to lender, but the most common requirements are for the small business to produce financial statements, projections of income and expenses, details on what the loan will be used for, and an aging of accounts receivables and payables. These should be in written format and delivered to the lender at the time of the loan application.
After the lender reviews the provided information, it will either approve or deny the loan. If the latter occurs, the business owner has the right to ask the lender to reconsider the loan under the SBA guarantee program. Experienced financing institutions are familiar with SBA lenders rules and regulations but the average business owner may not be. Briefly, the SBA can guarantee the amount of a small business loan up to eighty-five percent. If the lender agrees to the arrangement, it will send the loan application along with a credit analysis to the SBA. The SBA will consider the application package and then will determine if it will guarantee the loan or not.
There are some qualifications that a business must meet in order for the loan to be approved by the SBA. It must be a for-profit business and it must conduct its business primarily within the United States. The SBA will also take into consideration the owner's character and management skills as well as any potential collateral that are required to secure the loan. Additionally, all owners of twenty percent or more of the business will be required to personally guarantee the SBA loan. Finally, the business must not exceed the SBA's size standards to be considered a small business. Information on these size standards can be found at the Small Business Administration's website and are dependent upon a number of factors.
As far as the terms of the loan are concerned, the interest rate and repayment schedule are negotiated between the SBA lender and the small business owner. Generally, both items will depend upon how the loan proceeds will be used and the ability of the business to make the payments, but the lender may consider other factors as well.
In addition to its assistance in lending matters, the Small Business Administration also arranges business, technical, and management training for small business owners who request it. Finance and accounting advice is available, too. The SBA's counseling services have been of great value to many business men and women over the decades since the SBA was formed. Today the SBA continues to complement many corporate credit services by securing fair loans for small businesses, improving their chances at success and thereby keeping America's economy healthy and productive.
Corporate Credit Concepts specializes in SBA Lenders. For more information about SBA Lenders and how it might benefit your business, please CLICK HERE for a free phone consultation.