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SBA and Small Businesses
The SBA is the acronym for Small Business Administration and is a federal agency that guarantees the loans of small business. It was founded in 1953, to assist American entrepreneurs build up a prosperous small business.
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The SBA Office of
Advocacy generously defines a small business owner as firms with fewer
than 500 employees. Still, the norm is almost 78.8 percent of small
businesses employ 10 or fewer workers.
Here’s how SBA works to assist the borrower and the lender. For example,
you own a small business and you’ve applied for a loan. The commercial
lender sees that your business plan is viable and has faith you’ll be
able to pay off your loan. However, the lender can’t carry it out
because of the size of the loan. The lender has the option of asking for
assistance from SBA, which then makes a thorough evaluation of the loan.
Afterwards, when the agency has verified that all the details in the
loan application are in order, it guarantees the loan. This is affords
you the borrower the excellent opportunity to get a loan, for which you
would not normally qualify. This also assures the lender that in case
you the borrower default on the loan that SBA will pay a portion
(between 75% and 85%) back of the loan.
SBA guarantees small business loans up to $1,000,000 (one million).
Here are some of the ways the funds from the small business loans
through the SBA can be used:
* The upgrading of equipment
* Furniture
* Working capital
Aside from this SBA also has other loan programs specifically geared for
minorities and the small business woman......
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