Like many people in this country, you may be thinking about starting your own small business. It's a fact that many new businesses are started in a bad economy, and most need a loan to get them started. One way is to get a loan from the government through the Small Business Association which loans millions to small businesses each year. These promissory note are the life blood of many businesses.
How does this work? The SBA is a federal entity that provides a way for small business to loan money through their banks using guidelines from the government program. They don’t actually provide the loan directly but rather provide the guidelines for banks and lending institutions to make the loans which the SBA then guarantees will be repaid. This lessens the risk to the banks so that they are more likely to make these types of loan, helping the local community in the process.
The standards for these SBA government small business loans are more a bit more flexible compared to other typical loans; participating lenders also still require wide-ranging and detailed documentation to evaluate any loan proposal. Keep in mind that the Small Business Administration does not allow their qualified lending partners to provide you financing if you were unable to meet any of their requirements. This is why you must make sure to get your requirements first and make sure you have all the paperwork filled out to the utmost accuracy before submitting them for an SBA loan.
Another thing to keep in mind is that the SBA loan guaranty requirements and practices sometimes change as the Government alters its fiscal policy to meet contemporary economic conditions. Therefore, you can’t rely on past policy when seeking assistance in today's market. Before making any decision go to their website and check out the latest requirements, as any new details are kept up to date on their site. These are much different than requirements for a promissory note form or other personal loan.
What kinds of reasons can you borrow money from the SBA program? Well, pretty much any legitimate business reason from those involved with lease improvements, purchasing commercial real estate, the purchase of new equipment or tools, working capital needs, building commercial structures or new facilities, purchase additional inventory, or even to acquire a new business.
The rates and payment plans available are also fairly good, with loans that provide a low down payment, lengthy amortization plans, and no balloon payments. Typical rates are very reasonable in comparison to banks, and vary depending on the amount you need. There are three main types of loan programs provided by the SBA, they are;
The 7(a) Loan Program, which includes financial help for businesses with special requirements. For example, funds are available for loans to businesses that handle exports to foreign countries, businesses that operate in rural areas, or other special assessments.
Microloan programs - What is a Microloan? This programs provides small, short-term loans to small business concerns and certain types of not-for-profit child-care centers.
CDC/504 program which is a long-term financing tool, designed to encourage economic development within a community. The 504 Program accomplishes this by providing small businesses with long-term needs.
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