Small businesses that need capital but have been turned down by traditional lenders can work with the U.S. Small Business Administration to obtain financing.
SBA-guaranteed loans range from $500 to $5 million and can cover most business expenses, including long-term fixed assets and day-to-day operating costs.
Some programs dictate how you can use the funds, which is why you should check with an SBA-approved lender when seeking a loan.
The lender can match your company with a loan that meets your business needs.
The SBA doesn’t distribute the loans but sets guidelines for loans made by its partnering lenders, community development organizations, and micro-lending institutions.
The SBA’s involvement reduces risk for lenders, making it easier for them to access capital, thus making it easier for small businesses to get loans.
To qualify for a loan, the small business must:
- Be a for-profit business that is officially registered and operates legally
- Be physically located and operating in the U.S. or one of its territories
- Have no other financing options other than the SBA
- Have invested the owner’s time or money into the business
In general, the rates and fees of SBA-backed loans are comparable to non-guaranteed loans.
Some loans come with continued support such as counseling and education to help you launch and operate your business.
SBA lenders and loan programs have unique eligibility requirements.
Eligibility is generally based on what a business does to generate income, the character of its ownership, and where it operates.
Businesses normally have to meet SBA size standards, be able to repay the loan, and have a sound business purpose.
A business with bad credit can qualify for startup funding.
Lenders can provide a full list of eligibility criteria for a loan.