As a small business owner, it’s important to know of the valuable resources the Small Business Administration (SBA) provides to help you both start and grow your business.
Getting to Know the Small Business Administration
A great small business always starts out as an idea, but in order to achieve your dream, you have to transform that idea into action. That’s where you can start to feel overwhelmed. As a small business owner, it’s important to know of the valuable resources the SBA provides to help you both start and grow your business.
If you’re just starting out, the SBA and its resources can help you develop your business and financing plans. As a federal organization with offices located throughout the United States, the SBA offers financial advice, mentoring, and financing sources to small business owners who need it.
Here are the three things you should know about how the SBA can help transform your idea into action.
- The SBA may act as a co-signer for your business. While the SBA does not make direct loans to businesses, they can guarantee a loan made to you by a bank for a fee. By servicing as a guarantor on the bank loan, the SBA can help your business receive lending assistance that may not otherwise have been available on reasonable terms. Often, start-up businesses or those with strong cash flow but insufficient collateral need to borrow money–however, without the SBA guarantee, the risk of such a loan is unacceptable to the bank. Guarantee of the loan by the SBA assures that if you cannot pay back the loan the government will reimburse a percentage back to the lender. It’s important to note, however, that not all loan requests are eligible for an SBA guarantee. Businesses must be operated for a profit and fall within the size standards set by the SBA, among other criteria.
- To be eligible for an SBA guaranteed loan, businesses need a strong foundation. The SBA looks for the following when determining if you are eligible for a guarantee on your loan:
- Ability to repay the loan
- Owners and operators with good character
- Feasible business plan
- Management expertise
- Adequate equity invested in the business
- Other credit criteria
- The SBA offers an extensive network of experienced professionals and resources, tailored to specific business needs. The Small Business Development Centers (SBDC) and Service Core of Retired Executives (SCORE) offices associated with the SBA can provide advice, counseling, and research assistance on starting and running a business. SBDC, in particular, is a national network of more than 900 service locations. Current or aspiring entrepreneurs can receive free, one-on-one start-up, growth, or improvement assistance from qualified staff and volunteers. SBDCs help business owners write business plans, complete realistic financial projections, and prepare to obtain bank financing and more. Find your local SBA resources by clicking here.
How the SBA Can Help You
If you’ve had challenges seeking financing to start or grow your business, the SBA can act as a valuable partner in helping you turn your ideas into action. The SBA exists solely to assist you, the small business owner, with all of the aspects of running your business and keeping it successful—their extensive experience partnering with banks, including Top 5 SBA Lenders like M&T, allows them to truly understand what’s important to businesses like yours.1
This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. Please consult with the professionals of your choice to discuss your situation.
1According to statistics released by the U.S. Small Business Administration (SBA) for total approved loans through the SBA’s 7(a) lending program during the federal fiscal year ending 9/30/2020.