Small Business Start-up Funding with SBA loans-Business Grants
You want to start your own business, but you do not know where to start. Getting small business start-up funding can be a challenge, but it can be done, especially with SBA loans.
What are SBA Loans?
The Small Business Association or SBA has many loan programs that one can use in order to fund his or her new business. I will briefly describe the top three small business start-up funding programs that a person can get help from.
SBA Loan Programs and Qualifications
First of all, you will need to go to your local bank, loan company or credit union to find out about the programs you may be eligible for. There are many, but I will describe only the top three widely used ones.
7(a) Loan Program
The first one I am going to talk about is the 7(a) loan program. This is the most popular program of the SBA. Small business start-up grant may be acquired within as little as thirty six hours of applying for this type of loan. You may get up to $750,000 from this loan. They do not lend the money directly to you. They simply help you to finance the money through your local lending institution. These loans are used for such things as asset purchases, leasehold improvements and working capital. If you are looking to borrow less than $150,000, you can apply for the Lowdoc program. This program eliminates much of the burdensome paperwork associated with applying for loans. The SBA express is a 7(a) loan program that is targeted towards lenders who have a good lending record with the SBA and can get as much as $250,000 into the hands of the prospective business owner quickly. To be eligible for this type of loan a small business owner must have less than $7 million in net worth and less than $2.5 million in net income. He or she must also have at least two or three years of financial statements and some equity in the business.
504 Loan Program
The second program I am going to talk about is called the 504 loan program. These loan programs are typically used to fund assets such as land or equipment. This loan is also funded through a lender such as a bank or credit union with a second loan from a certified development company or CDC that is funded by an SBAs guarantee of up to forty percent of the assets. This loan can be up to one million dollars and the borrower must put up ten percent in equity. Again, to be eligible for this small business start-up funding program, the borrower must have less than $7 million in net worth and less than $2.5 million dollars in net income.
7(m) Microloan Program
The third program I am going to talk about is called the 7(m) microloan program. This program only provides loans of up to $35,000, with the average loan being $10,000. These funds come directly from the SBA and are given to small business owners by way of community-based, non-profit organizations rather than a lending institution like the other two. To find an organization that cooperates with the SBA, you can visit the SBA website. Any new business can apply for this type of loan, however, borrowers may have to take technical assistance classes first that are offered by the lender.
Summary of SBA Loans
In conclusion, whatever business you may be considering to start, there is a loan program out there to help you. These are just are few and there are some that are specific to such things as ones gender, race and industry. Three things you can do right away to improve your eligibility is create a solid business plan to show with your application, comprehensively research each loan program and the kind of businesses that get those loans, and generate some of your own equity to contribute to the business. You are sure to be on the way to your own business in no time.
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