Small Business Loan 101

Small Business Loan

If you have a small business or you are a professional or self-employed individual, you may want to borrow money for your company. How does a small business loan work, exactly, and who funds such loans? We’ll discuss this, in today’s article.

A small business loan falls into a category of specialty loans that are designed to fund companies that don’t meet traditional criteria. Obtaining a large low-interest loan from a major bank in today’s economy requires meeting certain criteria; you must have good credit (both personal and business), you must have solid income (both personal and business), and you must have a good business plan. Those who don’t fit perfectly into this mold must use other resources created and backed by private capital markets.

So, what do you do if you are just one person with a great idea and no business history to back it up? You will want to use programs such as the Small Business Administration’s Small Business Loan program. This program has funds allocated by Congress each year to guarantee them.

This means that the federal government, in case of a loan default, protects the lender by repaying the loan. Because of the greatly reduced risk, banks are willing to lend to many different types of borrowers who wouldn’t make the cut without the SBA. This allows some ideas to flourish, which wouldn’t have otherwise seen the light of day. This helps to stimulate the US economy.

For more information, go to Small Business Loan at

Small Business Loan 101 was last modified: November 8th, 2011 by Amit Kraidman
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