Compare These Top Vendors for Government Business Loans

A Guide to Government Business Loans

Government business loans are federally back loans, typically with lower interest rates. These small business loans are available for a variety of business needs including start-up, real estate purchases, equipment purchases and expenses, and help millions of small businesses launch and remain open. If you own a small business, or would like to become one, the U.S. Small Business Administration (SBA) can provide funding as well as invaluable guidance about business operations.

The SBA was created in 1953 for the express purpose of helping Americans start, build and grow businesses.  You can apply with the SBA for access to disaster assistance loans, start-up loans, equity capital and surety bonds. A commercial lender will help you work with the SBA to qualify for these government funds. Find a SBA Lender in your area by visiting SBA.gov.

Prior to meeting with the SBA Lender you need to assess your current financial and fully understand your needs. The SBA recommends asking and answering the following questions:

Do you need more capital? Can you manage existing cash flow?

An infusion of working capital may be in order if you find it difficult to pay bills on time.

What is the nature of your need?

Are you expanding? Do you need a financial safety net?

How urgent is your need?

It's better to anticipate your needs rather than looking for money under pressure, and loan approval is more difficult if your company is already in trouble. Try to plan ahead and secure financing before a crisis hits.

How great are your risks?

Business ownership is inherently risky. The degree of risk associated with your business will impact your loan cost and options.

In what state of development is your business?

Start-up and expansions – transitional stages in a business -- tend to be the most urgent and costly.

How will you use the capital?

Lenders will want to know how you’ll use the loan funds to gauge the viability of your business and ensure repayment.

What is the state of your industry?

The current economic state of your industry -- depressed, stable, fast-growing – affects your search for loan funding. A business that’s less vulnerable to difficult economic scenarios will usually be granted better terms.

Do you operate a seasonal or cyclical business?

Short-term, seasonal loans are typically smaller and mature more quickly. Cyclical industries often have ebbs and flows, and erratic cash flow, requiring loans to survive depressed periods.

Does your management team make the grade?

Your SBA lender will need to be convinced that you have a competent management team in place.

Is your business plan in place?

Lenders have to know if you’ve developed a solid business plan, whether you’re just starting or looking to expand.