The government attempts to provide resources that can help encourage businesses to continue to grow. Business loans are essential to fostering a healthy economy, and the government has acknowledged this fact by taking steps to allow businesses to secure the financing that they need to succeed.
While the Small Business Administration (SBA) does not directly offer loans, it does aim to connect small business owners with lenders. Loans that are found through the SBA can be used to start a new business or expand an existing business. SBA loans are easier to obtain than other forms of financing because the government guarantees up to 75 percent of the amount of the loan. This means that the government gives banks assurance that the loans will be paid back even if the small business owner is not able to personally pay back the loan.
Loan amounts range from $100,000 to $5 million. The amount of financing that a business can be approved for depends on the business plan and available assets.
Studies show that small business loans have decreased in recent history because small businesses are hesitant to borrow money in an unstable economy. However, government-backed loans make it easier for businesses to qualify for loans. Interest rates on loans available through the SBA have decreased, and this trend has made it an even better time for small businesses to secure financing.
Obtaining business loans that are sponsored by the SBA may be easier than a traditional bank loan, but there are still steps that businesses need to take to qualify for financing and increase the chance of business success. A solid, well thought out business plan is the most important part of applying for financing. The most successful businesses start with a good idea and expand on this idea by deciding on how to distribute financing, manufacture goods or set up services and establish an effective marketing plan.
The government has also been concerned with the development of businesses in rural communities. Because of this concern, the Business & Industry Guaranteed Loan Program is available to offer financing to businesses that wish to start running a company that benefits rural communities.
Businesses seeking financing for expansions or starting a new company can take advantage of government programs that aim to connect businesses with lenders that are likely to lend based on the business plan, assets and current success of the business. If you are a new company, visit www.startuploans.org for more information.