Raising Money for Your Business 4
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What are financials?
Financials are the income statements, balance sheets, and other financial data you prepare for your business plan.
Can I get a loan from the Small Business Administration?
The US Small Business Administration for the most part, doesn't make loans directly to small businesses. Instead, it offers qualified small businesses several loan guarantee programs that make lenders more willing to work with them. The best known of these programs is the basic 7a Loan Guarantee program, which guarantees 75% of the loan proceeds for loans up to $2,000,000.
You can learn about this and other Small Business Administration loan programs on the SBA's web site at http://www.sba.gov/financing/sbaloan/snapshot.html .
Can I get a loan from the Small Business Administration?
The Small Business Administration (SBA) has a number of loan programs available to help small businesses obtain financing. Most of the programs involve loan guarantees made by the SBA to approved lenders, rather than outright loans. If you don't qualify for a regular bank loan but have a good business plan and are creditworthy, you might qualify for a guaranteed loan since the programs guarantee that the SBA will pay a percentage of the loan if the business defaults on it.
Among the SBA loan programs are:
- The 7a Loan Guaranty program [Basic 7(a) Loan Program] guarantees loans of up to $2 million for 75 percent of the loan proceeds. For additional information see http://www.sba.gov/financing/sbaloan/snapshot.html
- The LowDoc loan program guarantees loans of up to $150,000 for 85 percent of the loan proceeds. As the name implies, these loans feature a simplified application process. The borrower need only complete a one-page application. Details of the program are available at http://www.sba.gov/financing/lendinvest/lowdoc.
- The MicroLoan program offers very small loans to prospective small business borrowers. Under the program, the SBA makes funds available to nonprofit intermediaries, who in turn make loans to eligible borrowers in amounts up to a maximum of $35,000. The average loan size is [$10,500. The SBA program is not available in all states and the intermediary agencies change periodically. For further information see: http://www.sba.gov/financing/sbaloan/microloans.html .
The SBA guarantees a variety of other loans for specialized needs such as the purchase of fixed assets, defense diversification, and foreign trade. The best source of information about such loan programs are your local SBA, SCORE, or Small Business Development Center offices. Regional economic development agencies can also provide information and help you find the right funding for your needs. You can find more information about SBA loan programs on the SBA web site
http://www.sba.gov/financing/index.html.
Does the SBA offer any other kinds of loans or financial assistance to small businesses?
Several other types of financial assistance are available through the SBA that can be of value to growing small businesses. Among them:
- The surety bond guarantee program. Under this program, the SBA guarantees a bid or performance bond, which may be required to get construction contracts, allowing the small business to qualify for the bond it might not otherwise get. (A bond is a guarantee that work will be performed or completed. If the company being bonded can't complete the project, the bonding company has to step in and complete the contract work or pay any losses caused by default on the contract.)
- Disaster loans. Loans to help small businesses recover from disasters such as earthquakes or hurricanes.
- Export Revolving Line of Credit program (ERLC). This program offers revolving lines of credit for small businesses that export their products overseas.
The SBA also licenses and provides some of the funding for certain venture capital firms. These firms are known as Small Business Investment Companies (SBICs). Apple Computer, Federal Express, and Nike are examples of the types and sizes of businesses that have received SBIC funding in the past. You can find more information about SBICs at http://www.sba.gov/INV/
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