Small Business Administration loans are available for numerous purposes to many small businesses from a home based business with no employees besides the owner to multi-branch small businesses. Loans amounts vary, with the cap falling between $5,000 and $5,000,000, depending on the loan. Commercial loan companies, most often banks, make these loans but the SBA backs them.

Preparation is the key to obtaining an SBA loan. Consider the following SBA loan basics to determine if an SBA loan is right for your business:

1. Determine the type of SBA loan you feel is appropriate for your business and its needs.

2. Find a lender that can work with you to secure an SBA loan.

3. Figure out if you qualify for a special circumstance SBA loan.

Action Steps
The best contacts and resources to help you get it done

Learn about the specifics of SBA loans

SBA loans can be used for numerous purposes, including purchasing real estate for the business, paying employees or consolidating business related bills. Learning about each program, including qualifications, ensures you are applying for the correct loan.

I recommend: You can find basic SBA loan information at CreditInfoCenter.com. This company describes the approved uses and base SBA lending rates. All Business has detailed SBA financing information, including a step by step guide to securing a business loan.

Choose your preferred SBA lender

The SBA loan program is in place to guarantee your loan. The SBA usually doesn't make its own loans. This means you will have to find an approved SBA lender in your area. Choosing a lender will depend largely on the requirements the lender has in place for SBA backed loans.

I recommend: The US Small Business Administration offers a list of SBA lenders based on the program in which you want to participate. You can also get help with business plans and other small business related questions BusinessFinance.com offers a free matching service that allows you to find an SBA lender that meets your needs.

Consider special circumstance SBA loan programs

After declared disasters, such as hurricanes or terrorist attacks, certain Small Business Administration loan programs can be used to rebuild personal property. You will have to meet certain criteria to obtain this funding, but the guidelines are generally more relaxed than for traditional SBA backed loans.

I recommend: FEMA has information about the SBA disaster loan programs, including descriptions of the three programs. GovLoans.gov has descriptions, including qualifications for various SBA loan programs. You can even find information about SBA loans for personal property on this website.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you are unable to secure an SBA loan, consider applying for an SBA grant. These grants are usually difficult to obtain because of the numerous people who apply for them, but your credit score doesn't affect a grant since you don't pay it back.

It takes money to start and grow a small business, and one of the best ways to get a loan at an attractive interest rate is through one of the small business loan programs sponsored by the U.S. Small Business Administration (SBA). The money doesn't actually come from the SBA but rather from participating commercial banks and other traditional lenders. What the SBA does is guarantee a portion of these small business loans — in effect, the SBA agrees to accept some of the risk if you go broke. With SBA backing, budding entrepreneurs who might not otherwise qualify for loans can secure the cash they need. That's not to say that SBA-backed loans are easy to get. The requirements are still strict. The money can be used for a variety of purposes:

1. Get working capital to run your business
2. Purchase machinery like tools and trucks
3. Purchase equipment and furnishings like desks, computers, phone systems or restaurant gear
4. Purchase, remodel or upgrade your business site
5. Refinance an existing loan

Action Steps
The best contacts and resources to help you get it done

Know your needs

Determine how much you need, how you will use the money and how the investment will help your business succeed. Be ready to explain how and when you can repay the money. Loan reviews are rigorous.

I recommend: The SBA small business financing overview will get you started.

Prepare your loan proposal

You'll need a business plan and a balance sheet with solid projections for income and expenses. You must provide information about who you are and why you can be trusted with a loan.

I recommend: Review financing requirements before you start the loan process, then download free templates to help you prepare a balance sheet, income statement and cash statement. When you're ready to start the loan process, visit the loan application page.

For the smallest loans, start here

Need a loan of $35,000 or less? The SBA Micro Loan program is the place to look. Offering loans up to $35,000 for terms up to six years, the program helps you get quick cash for just about anything you need except real estate. The average loan size is $10,500.

I recommend: Discover the ABCs of Micro loans and shop a list of participating micro lending organizations to find one near you.

Get to know the SBA 7(a) program

The SBA's primary lending program is its 7(a) Loan Guaranty, which offers both flexibility in how the money can be spent and terms of up to 10 years for working capital and 25 years for fixed assets. The loans are made by participating banks and can go as high as $2 million, although the SBA guaranty only goes up to $1.5 million.

I recommend: Discover what the SBA seeks in a 7(A) program loan application and learn more about eligibility criteria.

Get prequalified

One way to speed up the SBA loan process is to get prequalified. The SBA loan prequalification program offers to pre-screen applicants for loans up to $250,000. The review focuses on character, credit, and experience and can get you a pass into the express lane when you go to a bank for your SBA loan.

I recommend: See details of the SBA's prequalification program.

Shop and compare lenders

Since SBA loans are made through banks and organizations other than the SBA, it helps to shop around for the best terms and conditions. Some of the nation's biggest banks offer online SBA loan applications, but smaller regional banks can sometimes offer better deals.

I recommend: Download a loan application from Bank of America, Wachovia or Wells Fargo, or shop for lenders by downloading the SBA list of preferred lenders.

Big loans for bigger needs

Need more money? The much more demanding and restrictive CDC/504 loan program provides long-term financing for projects that create jobs and are deemed helpful to a community's economic development. The loan process is handled by one of 270 non-profit Certified Community Development Companies in the country. The biggest loans – up to $4 million – are available for manufacturing concerns.

I recommend: To learn more about the program go to the SBA 504 loan site. Also check out the list of Certified Development Companies around the country that handle 504 loans.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Make sure your management team is strong enough to carry out your business plan and be prepared to explain why. Lenders like numbers, but they know that a business is no better than its people.
• •  Get to know your lender. You don't need to be personal friends, but it helps to have a close working relationship with the person who holds the purse strings to your business.
• •  Be prepared to invest your own money and assets along with your lender's. Banks like to know you have a vested interest in success.
• •  Get help if you're having trouble with the loan process. The SBA has a network of services to assist small business owners, including local Small Business Development Centers, the Service Corps of Retired Executives (SCORE) and Women's Business Development Centers
• •  Don't give up. Just because one bank turned you down doesn't necessarily mean another won't approve. Get as much information as you can about the rejection and try to learn from it.

SBA loan education and training comes from a variety of sources depending upon your level of interest and the position you are seeking. Loan officers who handle SBA loan programs must have special licenses. Other SBA employees, such as those providing disaster assistance to small businesses, must have completed specialized training but do not require certification.

If you are interested in working in Small Business Administration funding but are not sure if it's the right career for you, spend some time reviewing the following information which offers a comprehensive overview of this dynamic field:

1. Secure a degree so you can evaluate and process applications for a small business administration loan.

2. Learn what it takes to become an SBA lending professional who can assist businesses with disaster assistance and business development.

3. Take online courses that educate you as a SBA lender.

Action Steps
The best contacts and resources to help you get it done

Become licensed as a loan officer who can dispense SBA loans

Many SBA loan officers accept applications from individuals seeking to secure funds from banks. Like most financial institutions, the SBA requires its loan officers to have completed a certain number of business and financial courses at an accredited school.

I recommend: The school of business at Kaplan University offers degree programs and certificate programs designed specifically for those who seek licensure as loan officers. Obtain an MBA in Finance and Accounting through Regis University.

Take classes that prepare you for special positions at offices providing SBA loans

Specialists in disaster assistance must know how to respond when small businesses have been hurt by natural disasters. They must know what kind of public funding the small business is eligible for and how they can assist in the recovery process. Business development specialists become experts in assisting start up businesses that are looking to expand.

I recommend: Check out the Guide to SBA’s Disaster Assistance Programs to learn the SBA’s role in assisting businesses after a disaster. California Disaster Assistance Training is an example of a state government that provides business professionals with specialized knowledge of how they can guide small businesses through the sometimes painful process of recovering after a natural disaster has struck.

Pursue education on small business administration loans

Learn loan processing basics, the regulations governing loan officers and how to work with a variety of loans, such as home mortgages, auto loans, college loans and personal loans.

I recommend: NAGGL offers conferences that provide training for SBA lenders. The SBA offers information to help lenders put together a loan package.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Your SBA loan education and training can begin with an apprenticeship or internship. Contact an SBA office to see if it participates in the SBA internship program.

SBA loans are among the best sources for financial aid for the small business. The Small Business Administration offers a level of guarantee for these loans. The loans are still provided through a third party lender. If the borrower fails to follow the agreed terms, the SBA offers financial support to the lender to guarantee the loan. SBA loans include the 7(a) loan, the 504 SBA loan program and disaster assistance loans. Take the time to learn other key terms associated with the SBA loan programs.

Action Steps
The best contacts and resources to help you get it done

7(a) loan

The 7(a) loan is one of the SBA loans commonly used by start-up businesses. This particular loan is an opportunity for low-income borrowers, veterans and new and emerging businesses to get a start.

I recommend: AllBusiness provides more information on the 7(a) loan program, including pre-qualifications required for it.

504 SBA loan program

The 504 SBA loan program is another of the government-backed programs for businesses. This particular loan program is mainly used to purchase real estate, purchase major equipment or to build buildings for commercial use. These programs are aimed at expanding businesses.

I recommend: The City of St. Louis website provides more information on the 504 SBA loan program, including an application for it.

Disaster assistance loans

The SBA offers disaster assistance loans. These loans have a design to provide funds to business owners who are struggling with natural and man made disasters. They are a low cost way of getting the business back up and running.

I recommend: The Oklahoma Small Business Development Center provides more information on disaster assistance loans.

Economic Injury Disaster Loans (EIDL)

The SBA Economic Injury Disaster Loan is a program providing small businesses with low interest loans to help them through difficult economic times. It is specifically for those businesses suffering substantial economic injury. The loan gives the business operating expenses until the business can recover.

I recommend: The Washington Military Department provides the details of Economic Injury Disaster Loans.

Business Physical Disaster Loans

The SBA provides Business Physical Disaster Loans. These loans are for nonprofit and for profit businesses of any size that suffer physical damage. The damage may be the result of a variety of types of disasters.

I recommend: GovLoans provides more information on Business Physical Disaster Loans.

Surety bond

Another type of SBA loan product is the surety bond. This is an agreement between the surety, the contractor and the project owner. The surety provides assurance that the project will be complete even if the project owner fails to do so.

I recommend: The Small Business Administration provides more information on surety bonds.