Although there are many different government agencies available to help you start, acquire, manage and expand a business, today I’m going to talk about just one agency, The Small Business Administration (SBA). These guys are particularly helpful and I have had many positive experiences working with them.
As an example, my prior company was successful in obtaining a mid-six-figure SBA loan to develop and launch a microprocessor vision-screening device. Thanks in part to that loan, we went on to sell my device around the U.S. and the world, make two acquisitions, go public and sell out to a huge multinational corporation.
There are many different programs to look at and the SBA offers small business owners many varied opportunities. The qualifications for each program are specific, so understanding how SBA works is the first step towards receiving assistance.
According to the SBA website: ‘The SBA provides a number of financial assistance programs for small businesses that have been specifically designed to meet key financing needs, including debt financing, surety bonds, and equity financing”.
Remember: the SBA does not make direct loans to small businesses. Rather, SBA sets the guidelines for loans, which are then made by its partners (banks, lenders, community development organizations, and micro-lending institutions). The SBA guarantees that these loans will be repaid, thus eliminating some of the risk to the lending partners.
So, when a business applies for an SBA loan, it is actually applying for a commercial loan, structured according to SBA rules and regulations with an SBA guaranty. Importantly, you must show that you really need an SBA-guaranteed loan. Loans will likely not be made to a small business if the borrower has access to other financing on reasonable terms.
SBA loan guaranty requirements and practices can change as the government dictates SBA policy based on current economic conditions. Therefore, you should not rely on what the SBA has done in the past when seeking assistance.
There are many great stories about how the SBA has helped young and not-so-young first-time entrepreneurs find the startup capital they seek to launch a business.
The first step is to contact your local SBA District Office to get access to SBA programs and other resources in your area. SBA’s District Offices are responsible for the delivery of SBA’s many programs and services throughout the country. Services available include:
- Free counseling, advice and information on starting a business through the Service Corps of Retired Executives (SCORE)
- Financial assistance for new or existing businesses through guaranteed loans made by area bank and non-bank lenders
- Free consulting services through the network of Small Business Development Centers. SBDCs also conduct training events throughout the district – some require a nominal registration fee
- Assistance to businesses owned and controlled by socially and economically disadvantaged individuals through the Minority Enterprise Development Program
- Women’s Business Ownership Representatives are available to advise women business owners
- Special loan programs are available for businesses involved in international trade
- Guaranteed loans are available for credit-worthy veterans
I am certainly not an expert on the SBA, but if you are starting, expanding or buying a business it makes sense to talk the folks at the SBA.
As I always say, starting a business or being in business requires a team of experts, mentors and supporters. In my opinion, the folks at the SBA are the place you should start for some advice and help.
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Source: Jeremy’s Blog