by Irish Taylor
http://www.startupbusinessloans.com
©
2010
In 1953, Small Business Administration or the SBA was
organized by the government. Their objective is to help small business owners
in the United States. The government is well aware of the fact that small enterprises
play a big role in the development and growth of a country's economy. That is
why SBA was launched in compliance with the Small Business Act.
It
is important to realize that the SBA does not directly grant cash fund or loans
for businesses. The SBA had been created to help smaller businesses whose loan
applications have been rejected by banking institutions or private loan companies.
If you have attempted to apply for a business loan before but your application
was declined, you can get in touch with the SBA and ask for assistance. Subsequently,
the SBA would be the agency to work with you in choosing the right loan provider
who would be ready to give you the loan you need.
There
are different business loan programs accessible through the SBA. These are the
Loan Guarantee Program for new and growing businesses; the 504 Fixed Asset Financing
Program for business construction projects and land purchases; the MicroLoan Program
which amounts up to $35,000; the Economic Development Program which gives free
counselling and low-cost training; and the 8(a)-Business Development Program for
entrepreneurs who are regarded as socially and economically disadvantaged.
SBA
Loan Restrictions
The approval of your loan is dependent
upon four factors: the kind of business you own, the size of your company, your
goal for borrowing funds, and special conditions. In order to get approved, the
applicant should be the owner or should have invested a considerable amount in
the company. It needs to be a small business, which means it must be individually
owned and dominant in size. The business loan can be utilized for buying business
equipment, stocks, real estate, for renovation, or as a working capital. Special
Conditions pertains to business franchises, clubs, farms, fishing boats, schools,
etc. The SBA has specified rules and regulations in case the business fails to
meet the requirements of this category.
Keep in mind that
you can never use an SBA loan to repay current debts and delinquent taxes. In
some instances, a small business may be approved if it can prove that refinancing
will be advantageous for the organization and that the debts were not a direct
result of uncontrolled spending or financial mismanagement.
Who
else are not qualified to get an SBA loan? Selected types of businesses are disqualified
and these are companies with questionable foundation or are suspected to perform
illegal activities. Gambling businesses, pyramid schemes, lending activities and
real estate investments are just to name a few. Non-profit and religious organizations
are also not acceptable.
To sum up, keep in mind that:
-
to be considered for an SBA loan, you should first have been refused or declined
by a commercial business loan lender; - the SBA will not directly release cash
financing but coordinates with loan providers and financing firms on behalf of
small businesses;
- to obtain approval, a small business
must be able to pass the SBA policies and guidelines for small businesses.
