Today we will be discussing the small business administration and what it does. The SBA is a federally run institution designed to help small businesses be more successful. We will describe how they function in more details in today’s article.
There is a common misconception that the SBA exists only to provide loans for small businesses. This is actually not true, they provide a range of services and in fact are not even a direct lender at all. One such service is their business plan consulting service. To get a loan you will want to have a solid business plan. This plan is not simply an overview of your goals, but rather a detailed account of all your expected expenses, revenue, profits, etc. It should realistically include all possible expenses and how you intend to pay for these expenses. This is not only critical if you are attempting to get outside funding, but it is also a very good practice for your own benefit as well. They small business administration can sit you down with one of their consultants to create a solid business plan that you can then use to get an SBA approved loan.
So what are SBA loans if they are not a direct lender? Loans of this type are structured in a way approved by the small business administration to meet certain criteria. Most of these criteria have to do with interest rates, fees, etc. You should discuss the details with your assigned local agency if you decide to use this resource. With your well-formed business plan, and other documentation on request, you should be able to find a lender that is a good match for your company. It can be useful to have a third party advocate in these dealings, and this is the reason the organization was formed in the first place. Make sure to ask questions along the way so that you fully understand the terms and conditions of your new loan and the implications it will have on the day to day operating costs and resources you have available to your company.
So in short, the SBA assists you in two ways. First, they help you organize and formalize your business strategy in the form of a business plan. Second, they assist you in getting funding through their loan program with upfront and universally understood criteria. This helps you find a good match, and the lenders find a good match as well, to get funding as quickly and as painlessly as possible.