FAQs of U.S. Small Business Administration (SBA)

The United States Small Business Administration (SBA) connects small businesses with lenders and funding to help them plan, start and grow their business. Following are some of the Frequently Asked Questions (FAQs) about U.S. SBA.

What is The U.S. (SBA)

U.S. Small Business Administration (SBA) is a United States Government Agency, supports small businesses and entrepreneurs to grow their businesses. The SBA offers significant educational information with assistance for small business startups and growth in the United States. The SBA is established in 1953.

Reference Information: https://www.sba.gov/about-sba

What is the purpose of the U.S. SBA

The purpose of the U.S. Small Business Administration (SBA) is to assist and protect the interest of small business concerns to maintain and strengthen the overall economy of the United States. Throughout the years, the U.S. SBA has delivered millions of loans, loan guarantees, counseling sessions, and other forms of assistance to small businesses.

Reference Information: https://www.sba.gov/about-sba/organization

What are the services offered by The U.S. SBA

Following are some main services offered by The U.S. Small Business Administration (SBA)

1) Business Guide – guides to plan your business, launch your business, manage your business and grow your business

2) Funding Programs – Guarantee Loans, provide disaster assistance low-interest loans, provide surety bonds, and help businesses to obtain government grants

Reference Information: https://www.sba.gov/business-guide
Reference Information: https://www.sba.gov/funding-programs

What are the funding services offered by The U.S. SBA

Following are some main funding services offered by The U.S. Small Business Administration (SBA),
1. Loans
2. Investment capital
3. Low-interest disaster loans
4. Surety bonds
5. Government grants

Reference Information: https://www.sba.gov/funding-programs

What are the ineligible businesses for SBA 7(a) loans

Businesses which are engaged in illegal activities, speculation, multi-sales distribution, gambling are not eligible for the U.S. SBA 7(a) loans.

Reference Information: https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility#section-header-19

Why should I apply for SBA 7(a) loan

SBA 7 (a) loan program provides help for small businesses with special requirements. Loan can be used to increase short and long-term working capital, refinancing the existing debt, and purchase assets such as furniture and fixtures. This is an ideal option when real estate is part of a business purchase.

Reference Information: https://www.sba.gov/funding-programs/loans/7a-loans

What are the key factors of eligibility for SBA 7(a) loans

Factors of eligibility to the SBA 7 (a) loan depend on the business income stream of the company, credit history of the company, and the business location.

Reference Information: https://www.sba.gov/funding-programs/loans/7a-loans

Does SBA works with lenders to provide loans for small businesses

SBA works with their partnering lenders to provide loans to small businesses. Guidelines set by the SBA for the loans made by its partnering lenders. SBA makes it easier for small businesses to get loans.

Reference Information: https://www.sba.gov/funding-programs/loans

Does SBA lend money directly to small business owners?

The SBA does not provide lending to the small businesses, rather they guarantee business loans provided through SBA preferred financial institutions such as banks. SBA sets certain guidelines for its partnering lenders and institutions. If the borrower has defaulted and the loss is with the lender, then the lender submits the loss to the SBA to honor its assurance. The SBA reduces overall risk for the lenders.

Reference Information: https://www.sba.gov/funding-programs/loans

What are the differences between SBA 504 loan and SBA 7(a) loan?

SBA 504 is a long-term, fixed-rate loan for major fixed assets, that promotes business growth and job creation. In common terms, this loan is oriented more towards commercial real estate and assets.

SBA 7(a) loan is more focused on general-purpose. This loan is the best option if real estate is part of a business purpose. This loan can be used for short and long-term working capital, current debt refinancing, and the purchase of fixed assets.

Reference Information: https://www.sba.gov/funding-programs/loans/504-loans
Reference Information: https://www.sba.gov/funding-programs/loans/7a-loans

Does SBA provides disaster assistance loans?

Yes, the SBA provides low-interest disaster loans to help small businesses recover from disasters successfully.

Reference Information: https://www.sba.gov/funding-programs/disaster-assistance

What are the types of SBA disaster assistance loans?

1. Physical damage loans – Loan to cover if physical assets damaged during a disaster
2. Mitigation assistance loan – Loan to cover operational expenses to mitigate the disaster
3. Economic injury disaster loan – Loan to provide economic relief to small businesses.
4. Military reservist loan – Loan to make up for employees on active duty leave

Reference Information: https://www.sba.gov/funding-programs/disaster-assistance

What are the advantages of an SBA loan compared with a traditional bank loan?

SBA loans tend to carry higher amounts, lowest interest rates, and longer repayment terms compared with traditional bank loans.
SBA loan is partially guaranteed by the government. Hence there is a chance for higher-risk borrowers to apply for an SBA loan which they could not be eligible for a traditional loan due to risk factors.

Do banks (lenders) benefits from SBA loans?

If the borrower is defaulted and the loss is with the lender, then the lender submits the loss to the SBA to honor its assurance. The SBA guarantees a portion of the loan to the banks (lenders). The SBA reduces overall risk for the lenders.

Reference Information: https://www.sba.gov/funding-programs/loans

What are SBA microloans?

Microloans are smaller size loans of up to $50,000 provided to small businesses through SBA funding participants. Microloans can be used for a variety of purposes that help small businesses to expand more on their business.

Reference Information: https://www.sba.gov/funding-programs/loans/microloans

Can I use an SBA microloan to pay existing debts or purchase real estate?

No, you can not use microloan proceeds to pay existing debts or purchase real estate.

Reference Information: https://www.sba.gov/funding-programs/loans/microloans

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