The best place for a small business owner to get financial assistance is from the U.S. Small Business Administration (SBA). This federal agency has — by far — the cheapest money and the best terms for small business people. Plus, it’s easier now than it ever has been to apply and qualify for SBA programs.

Almost all legitimate businesses can apply for an SBA loan. The SBA offers a variety of specific programs for start-up companies and small businesses. Loans are available for purchasing machinery, equipment, or fixtures, or for establishing lines of credit (CAPLines) that assist small businesses with cyclical working capital needs.

There are loan programs for women and minorities, veterans, small asset-based lending, defense and technical assistance, export working capital, international trade, community adjustment and investment, energy and conservation, pollution control, and disaster relief. The SBA also created a program called New Markets Venture Capital (NMVC), which is a capital development program designed to promote economic stimulation and job opportunities in low-income communities.

Here are a few of the more popular SBA programs. There are many more, and the agency continues to update and add programs every year.

1. The 7(a) Loan
The 7(a) loan is one of the SBA’s primary lending programs. It assists small businesses that are unable to secure financing on reasonable terms through normal lending channels. You can use the 7(a) loan for most business purposes, including the purchase of real estate to house business operations; renovation or leasehold improvements; acquisition of equipment, furniture, fixtures, or machinery; purchase of inventory; and working capital.
Effective December 2000, a maximum amount of $2 million has been established for 7(a) loans. However, the maximum dollar amount the SBA can guaranty is generally $1.5 million. There are no balloon payments, application fees, or points permitted with 7(a) loans. Prepayment fees are permitted on loans with maturities of fifteen years or longer.

2. Revolving Line of Credit Program
The SBA developed a revolving line of credit program in late 2003. If you are interested in that option, refer to the SBA web site or call your state or regional SBA office for details.

3. The 504 Loan
The 504 Certified Development Company (CDC) Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. The loan cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing. The maximum loan amount is $1.5 million for meeting the job creation criteria or a community development goal. Generally, a business must create or retain one job for every $50,000 provided by the SBA. The principal owners of the business must provide personal guarantees, and the project assets being financed are used as collateral.  

One of the most popular programs, called “LowDoc,” streamlines the SBA’s small business loan process and increases the availability of loans under $100,000 to the small business community. Once you meet the lender’s credit requirements, you simply complete a one-page application form. The lender submits the completed application to the SBA and receives an answer within 36 hours.  

5. SBA Express

This loan program makes it faster and easier for lenders to provide SBA guaranteed loans of up to $350,000 to small businesses. There are fewer SBA forms and procedures, and the loans are processed centrally with almost instantaneous SBA response.

Normally the SBA requires guaranteed loans to be fully secured. With SBA Express, no collateral is needed for loans up to $25,000, and only limited collateral is required for loans up to $150,000. Terms of the loan allow up to seven years for repayment, with some extensions permitted. Lenders and borrowers can negotiate the interest rate; it can be fixed or variable, but it may not exceed the SBA maximums.

Also in 1998, the SBA launched a free, interactive web site called the Online Women’s Business Center at www.onlinewbc.gov. This web site provides information specific to women on a wide variety of topics, including starting your own business, networking, and management. It’s a model for women throughout the world seeking information on running and managing their own company.