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Overview of SBA Loan Programs
This
article was adapted from information available at the U.S. Small
Business Administration Web site.
The
Small Business Administration (SBA) is a federal government agency
that offers a variety of loan guarantee programs, allowing banks
and other private lenders to fund small businesses that can't otherwise
qualify for loans on reasonable terms. These lenders actually make
the loans, and the SBA guarantees them; the SBA has no funds for
direct lending or grants.
Currently,
the SBA offers a variety of loan-guarantee programs designed to
address diverse small business needs. The SBA imposes no limit on
the total loan amount you can request from the lender, although
it will guarantee only up to US$750,000. Practically speaking, this
means that the most you could expect from an SBA-guaranteed loan
is approximately US$1 million. Many loan programs are smaller and
have lower guarantees. The maximum SBA loan maturity is 25 years,
although smaller loans typically have shorter maturities.
If you want to speak to an SBA representative about any of the SBA's
loan programs, contact your local SBA office or call 1-800-8ASK-SBA
(the SBA Answer Desk).
The
following are brief descriptions of the major SBA loan programs
currently available:
SBALowDoc
and SBAExpress
These
two loan programs each offer financing up to US$150,000 and can approve
your loan within 36 hours of receiving your completed application.
Community
Express
This
is a pilot SBA loan program developed in collaboration with the National
Community Reinvestment Coalition (NCRC) and its member organizations.
Limited to selected NCRC lenders and specific geographic areas, it
serves mostly small businesses in traditionally under-served "new
markets."
U.S.
Community Adjustment and Investment Program (CAIP)
This
program is designed to aid communities adversely impacted by The North
American Free Trade Agreement (NAFTA). It is designed to encourage
business development and expansion in these areas.
504
Certified Development Company (CDC) Program
A CDC
is a nonprofit economic development corporation. CDCs work with the
SBA and the private sector in specific geographic areas. There are
about 290 CDCs nationwide. Loans must be used for fixed asset projects
such as land and improvements. They may also be used for purchase
of long-term machinery and equipment.
CAPLines
This
is an umbrella program that has five types of loans to help small
businesses meet their short-term and cyclical working-capital needs.
Loans can be for any dollar amount (except as noted). The five loan
types are as follows:
- Seasonal
Line: Advances against anticipated inventory and accounts receivable
- Contract
Line: Finances the direct labor and material cost associated with
performing assignable contracts
- Builder's
Line: For small general contractors or builders constructing or
renovating commercial or residential buildings
- Standard
Asset-Based Line: Asset-based revolving line of credit for businesses
unable to meet credit standards associated with long-term credit
- Small
Asset-Based Line: Asset-based revolving line of credit of up to
US$200,000
International
Trade
This
program is for businesses engaged in, or preparing to engage in, international
trade, or for businesses adversely affected by competition from imports.
Export
Working Capital
The Export
Working Capital (EWCP) Program was designed to provide short-term
working capital to exporters. A combined effort of the SBA and the
Export-Import Bank, the EWCP uses a one-page application form and
has a turnaround time of 10 days or less.
Pollution
Control
This
program is designed to provide loan guarantees to eligible small businesses
for the planning, design or installation of a pollution control facility.
DELTA
The Defense
Loan and Technical Assistance program is a joint SBA and Department
of Defense effort to provide financial and technical assistance to
defense-dependent small businesses adversely affected by defense cutbacks.
Prequal
Pilot
The
Prequalification Pilot Loan Program uses intermediaries to assist
prospective borrowers in developing viable loan application packages
and securing loans. The maximum loan amount is US$250,000.
Qualified
Employee Trusts
This
program provides financial assistance to Employee Stock Ownership
Plans.
Microloan
Program
Developed
to increase the availability of very small loans to prospective small
business borrowers, Microloans range from under US$100 to a maximum
of US$25,000. The average loan size is US$10,000.
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