Money for Your Business
Roughly 98 percent of the companies in the United States qualify as small businesses - and most of these businesses are eligible for U.S. Small Business Administration loans up to $750,000, available to build their operations.
To these businesses, the SBA guarantees of 90 percent on lenders loans up to $155,000 and guarantees of 85 percent on larger loans. The SBA even makes direct loans to eligible individuals and companies.
As with any business loan, the SBA and its associated lenders look at the applicant's personal credit history, the business financial profile and management experience, and the growth trends in the applicant's industry.
Among SBA objectives are greater support for women and minorities in business, aid to rural small business development, and urban business and job creation programs.
The 7 (a) loan guarantee program is the SBA's standard program. It aids small businesses needing funds to buy fixed assets or for working capital.
In the 8 (a) program, the SBA acts as prime contractor, contracting with other federal agencies to negotiate subcontracts with small businesses owned by socially or economically disadvantaged individuals.
In 1987, 370,000 companies in the U.S. were owned by Asians, American Indians and other minorities. The SBA made over 1600 loans totaling over $400 million to these companies.
There were more than 420,000 Black-owned business in the U.S. in 1987, up almost 40 % from 1982. The SBA made more than 500 loans and over 1600 8 (a) contracts totaling over $1.4 billion Black-owned companies in 1990.
Over 420,000 businesses were Hispanic-owned in 1987, up more than 80% since 1982. A number of these firms took part in SBA programs.
Disabled and Vietnam-era veterans who cannot secure business financing on reasonable terms from other sources can go to the SBA. Veterans can use these loans to start a small business, or to build an existing business.
Small companies in the field of energy conservation can find financial support in the SBA's Small Business Solar Energy and Conservation Loan Program. Loans are available to a broad range of companies seeking ways to cut use of U.S. energy resources.
The SBA's Small Loan program encourages SBA-guaranteed loans of $50,000 or less. Applicants should ask for the SBA Form 4 short form to apply for the small loans.
The recent microloan program offering loans of $200 to $15,000 makes SBA funding available to even tiny businesses.
The SBA HAL-1 and HAL-2 programs help handicapped individuals and non=profit workshops to establish, purchase or run a small businesses
The SBA's Certified Development Company (CDC) loan program offers credit for small and medium sized businesses that fall between the cracks of programs covered by traditional lenders. And the Export Revolving Line of Credit program helps small exporters to obtain an SBA guarantee on a loan or line of credit.
The task of raising money for a business is not as difficult as most people seem to think. This is especially true when you have an idea that can make you and your backers rich.
If in debt, you must devise some plan to get out of the red. You can declare bankruptcy, but that will tarnish your credit and financial records.
Small businesses never seem to have enough money. Bankers and suppliers, naturally, are important in financing small business growth through loans and credit, but an equally important source of long term growth capital is the venture capital firm.