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Back to Business Affairs
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7(a) Loan Guaranty Program - The 7(a) Loan Guaranty Program is one of SBA's primary lending programs. It provides loans to small businesses unable to secure financing on reasonable terms through normal lending channels. The program operates through private-sector lenders that provide loans which are, in turn, guaranteed by the SBA - the Agency has no funds for direct lending or grants.
Most lenders are familiar with SBA loan programs, so interested applicants should contact their local lender for further information and assistance in the SBA loan application process. Information on the SBA loan programs, as well as the management counseling and training services offered by the agency, is also available from the local office.
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Certified Development Company (504) Loan Program - The 504 Certified Development Company (CDC) Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. A Certified Development Company is a nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the SBA and private-sector lenders to provide financing to small businesses. There are about 270 CDCs nationwide. Each CDC covers a specific geographic area.
Typically, a 504 project includes a loan secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a loan secured with a junior lien from the CDC (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business being helped. The maximum SBA debenture is $1,000,000 for meeting the job creation criteria or a community development goal. Generally, a business must create or retain one job for every $35,000 provided by the SBA. |
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Prequalification Loan Program - The Prequalification Pilot Loan Program uses intermediaries to assist prospective borrowers in developing viable loan application packages and securing loans. Once the loan package is assembled, it is submitted to the SBA for expedited consideration; a decision usually is made within three days.
If the application is approved, the SBA issues a letter of prequalification stating the SBA's intent to guarantee the loan. The maximum amount for loans under the program is $250,000; the SBA will guarantee up to 80 percent for loans up to & including $100,000 and 75 percent for loans over $100,000. The intermediary (usually a Small Business Development Center) then helps the borrower locate a lender offering the most competitive rates. Small Business Development Centers serving as intermediaries do not charge a fee for loan packaging. For-profit organizations will charge a fee.
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LowDoc - Further streamlines the making of small business loans [maximum loan-$150,000; calls for a response from the SBA within 36 hours of receiving a complete application; and guaranty percent follows 7(a) policy].
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SBA Export Express - SBA Export Express combines the SBA's small business lending assistance with its technical assistance programs to help small businesses that have traditionally had difficulty in obtaining adequate export financing. The pilot program is available throughout the country and is expected to run through September 30, 2005.
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Microloan Program - The MicroLoan Program provides very small loans to start-up, newly established or growing small business concerns. Under this program, SBA makes funds available to nonprofit community based lenders (intermediaries) which, in turn, make loans to eligible borrowers in amounts up to a maximum of $35,000. The average loan size is about $10,500. Applications are submitted to the local intermediary and all credit decisions are made on the local level.
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