SBA Financing 101: How to Get Small Business Administration Loans or Grants


The Small Business Administration (SBA) works to strengthen the rights of small business owners and represents small business owners within government agencies. If you are interested in getting an SBA loan or grant, you must review the guidelines carefully and submit all of the information required. Learning how to get SBA financing will help your small business grow.

Benefits of Small Business Administration Loans or Grants

SBA loans have several advantages over a traditional bank loan, including longer repayment periods and lower down payment requirements. This allows you to keep more cash on hand for expenses. The SBA also provides up to 90 percent financing on some loans. Depending on the SBA loan program you choose, you may be able to take out a loan of up to $11.25 million.

If you want to get a SBA loan, you must complete all of the required steps in the process. Before filling out an application, determine whether you want to apply for the microloan program, the 7(a) loan program, or the CDC/504 loan program. The microloan program is for small businesses that need short-term loans in small amounts. The 7(a) loan program provides loans for businesses that meet special requirements. You may be able to qualify for this type of SBA loan if you have been affected by the North American Free Trade Agreement or if your business meets other criteria. The CDC/504 program is intended to promote business growth while financing small businesses. The funds from a CDC/504 loan may be used for business expansion or upgrades.

Preparing a Business Plan

Once you have identified the loan program that meets your needs, you must prepare a business plan. Your plan should include:

• Executive summary

• Business profile

• Documentation of management experience

• (Brief) statement of anticipated loan repayment terms

• Personal and business financial statements

• Description of your proposed business

• Financial projections

You should use spreadsheet programs to complete the financial statements that are required for your SBA application. All of this information should be prepared on a computer, printed with high-quality ink, and placed in a binder or presentation folder to make it easier to read. If you’re wary of doing it yourself, there are consultants available for hire to help you produce a business plan, as obtaining SBA financing depends on your ability to persuade the organization to give you a loan.

Pitfalls of Small Business Administration Loans or Grants

Getting this financing requires a significant investment of your time, but it also requires a financial investment. You may be required to pay an application fee to cover the cost of the credit check, so the lender can determine if you qualify for the loan. There could also be an underwriting fee, closing costs, maintenance fees, or packaging fees. Your lender will explain these fees and tell you how much it will cost you to apply for and accept an SBA loan. In the meantime, ensure you complete the loan application properly and submit an application packet that contains all of the required information. Making any errors during the application process will increase the amount of time it takes for a lender to review your application and approve your application for a SBA loan.

Although SBA grants are not available to finance a new business or pay for business expansion, the Small Business Administration makes several types of loans available to business owners. You must review the requirements carefully and submit a complete application package to improve your chances of being approved for a SBA loan.

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