SBA resource guide: Loan programs
The Small Business Administration has a variety of loan programs that are distinguished by their different uses of the loan proceeds, their dollar amounts and the requirements placed on the actual lenders. The three principal players in most of these programs are the applicant small business, the lender and the SBA. The SBA does not actually provide the loan, but rather it guarantees a portion of the loan provided by a lender (with the exception of microloans).
The business applies directly to a lender. Generally, an application includes a business plan that explains what resources will be needed to accomplish the desired business purpose including the associated costs, the applicants’ contribution, planned uses for the loan proceeds, a listing of the assets that will secure the loan (collateral), a history of the business and explanation of how the business generates income. Most important, the borrower provides an explanation of a repayment plan.
The lender will analyze the application to see if it meets their criteria and make a determination if they will need an SBA guaranty in order to provide the loan. SBA will look to the lender to do much, if not all, of the analysis before it provides its guaranty to the lender’s proposed loan. The SBA’s business loan guaranty programs provide a key source of financing for viable small businesses that have real potential but cannot qualify for credit on reasonable terms by themselves.
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