If you are starting a new business you have perhaps heard about the SBA loan program. But what is this program and how it doesn’t help your business in obtaining funding. In general this is a program designed to help your company put its best foot forward in order to obtain a loan for your new small business. We’ll discuss in further detail how the loan program works in today’s article.
The SBA loan program is not a direct funding program. This is to say that the small business administration does not actually furnish loans to small businesses. Their only actual lending program is for disaster relief funding. The program instead is more of a consultative service for your company. One of the services they provide which is instrumental to your new small business is business plan consulting. You can have an agent from the small business administration assigned to your company who can sit down with you to help you plan out your business in an official document. This official plan serves two primary purposes. First, it allows you to see where your estimates were perhaps not completely accurate and also to see where you have perhaps missed potential revenue or expenses. It is very important to have a realistic understanding of your businesses potential before starting. The second purpose which this business plan provides is to assist you in obtaining funding. Most lenders will require you to have a formalized plan before considering funding as they must have a reasonable assumption that you will be able to repay them.
On this note, the SBA’s second function is to assist you in getting a loan for your company. They do this by walking you through the application process and showing you where you perhaps need to provide more information or make changes to your business structure in order to obtain funding. There are also special loans which qualify as SBA loans which meet certain criteria and guidelines. You can discuss whether or not a loan of this type is appropriate for your circumstances with the agent that is assigned to you.
In short, the SBA was established to help new businesses set up correctly with realistic expectations and goals and to help them in obtaining funding for their company. This is a very valuable resource for many new businesses and I recommend that you contact your local representative to see which assistance they can give you.