How the SBA works

The different options of SBA financing

Why not to worry

What Is the SBA?
The U.S. Small Business Administration is an agency of the federal government, established in 1953 to assist small business enterprises. The most important program operated by the agency is the loan guaranty program, which provides a financial guaranty to qualified, eligible businesses to enhance their ability to obtain long-term capital financing from the private sector.

The SBA loan guaranty program has grown steadily over the years. Since 1989, with the advent of many regional bank consolidations and stricter federal banking regulations, the volume of SBA-guaranteed loans has more than tripled. In FY 1998, the agency guaranteed over $10 billion in loans to over 50,000 small businesses. In the process, the agency assisted with the creation of hundreds of thousands of jobs across the United States.

Although the SBA conducts many programs to assist small businesses, the focus of this book is on the assistance provided by the 7(a) Loan Guaranty Program. This information is also applicable to the 504 Program, which is administered through SBA-licensed, certified development companies.

The regulations governing these loan guaranty programs are subject to change from time to time. However, this book will provide the reader with a broad view of the regulatory and financial requirements necessary to determine eligibility and qualifications for the borrower. Mainly, the book will help the reader in the efficient and effective development of a commercial loan application.

The Loan Guaranty Programs
The two SBA loan guaranty programs that are currently funded by Congress for small businesses are the 7(a) Loan Guaranty Program and the 504 Program. They are governed by different regulations and are distinguished by: (1) eligibility standards, (2) restrictions on the use of loan proceeds, (3) repayment terms, and (4) the borrower’s approval process. These two programs are described below in order for the borrower to understand what kind of funding can be obtained through the agency.

* Source The SBA Loan Book

The comprehensive handbook for obtaining a Small Business Administration guaranteed loan.