SMALL BUSINESS ADMINISTRATION LOANS REQUIREMENTS

2007-05-02 10:04:19

( Business )



Small Business Administration

Small Business Administration is an agency under the Federal government’s executive branch tasked to provide assistance to small businesses. Its mission is to help strengthen the country’s economy by protecting the interest of small businesses and helping its owners recover from national disasters. Advocacy, management, procurement and assistance to small businesses are the four main mandate of this organization.

It offers Small Business Administration loans to help augment capitalization requirements of small businesses. However, the agency extends these loans by acting as guarantor of small businesses to private lenders. Thus, the agency does not operate as a lender.

Small Business Administration Loans Program

Various loan programs implementing Small Business Administration loans supports loan programs of various lenders to ensure that small businesses are easily tied up with these lenders and their loan products. However, the agency will prioritize supporting small businesses that have difficulty accessing commercial business loans. Thus, it will not guarantee a loan if a small business has no problem accessing loan and meeting requirements of lenders.

Eligibility

There are eligibility requirements to meet for small businesses to avail of the loan program of Small Business Administration. They must meet the criteria on size and type of business, operation within the country, availability of funds from external sources, use of loan funds and repayment.

Size of Business

A small business is eligible if it is independently owned and not influential in its industry. The size criteria vary for every industry or type of business. Thus, businesses in agricultural, construction, manufacturing, retail, wholesale and special trade contractors have different requirement each in terms of size eligibility. However, the general criteria involve number of employee and amount of annual sales.

Type of Business

Small Business Administration requires that small businesses must be for profit organizations to qualify under its small business loans program. However, there are types of for profit businesses who are not eligible to avail the loan guarantee service of the agency. Businesses involved in charitable and other not for profit activities, gambling, illegal activities, speculative activities, pyramid sales plans and real estate investment firms are not eligible to participate under the loan programs of the agency based on its rules and regulations.

Operation and Availability of External Funds

The small business applicants must be operating within the United States to be eligible for the loan program. Also, the agency will not provide assistance to small businesses that are capable of providing or accessing funds. The agency insists that small businesses prioritize usage of alternative funds within their organizations before availing their services.

Use of Loan Funds and Repayments

Funds availed from loans guaranteed by Small Business Administration must be used directly for the operations of the business. The agency requires that small businesses availing its loans program must show ability of paying off loans.

Small Business Administration strives to provide relevant services for the continuous development of small businesses. It recognizes its importance in the overall state of economy of the United States.


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