SBA Loans | How-to Guides for running your business from Business.com

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:

Get working capital to run your business
Purchase machinery like tools and trucks
Purchase equipment and furnishings like desks, computers, phone systems or restaurant gear
Purchase, remodel or upgrade your business site
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.

The official source of SBA Loans is the SBA Loan page at Business.com

More Featured Listings

State Farm® Small Business Insurance
Let State Farm® Help Your Small Business Grow. Visit Us Online!
SB Insurance
www.StateFarm.com

DIRECTV for Business
DIRECTV Business Packages. Worry Free with Professional Installation & Dedicated Service.
directv.com/business

Businesses Can Earn 2.35%
With GE Capital Corporation. Not An Offer Of Securities For Sale.
For Businesses | For Investors
www.geinterestplus.com/businesses

Public Relations Consultants
Press release service with proof of distribution report included with every package. Includes images, access to stats and more. Starting at only $49!
Press Rates | PressWriting Tips | Submit PR Release
www.24-7pressrelease.com