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What’s Next For Your Micro-Business
Small Businesses Get $19 Billion In Financing
Small businesses turned to the U.S. Small Business Administration (SBA) for commercial financing in record numbers in fiscal year 2005.
Businesses received $19 billion in financing and secured 97,891 loans through the SBA’s two main small-business loan programs. The loan volume set a record for the fifth consecutive year.
“This is fantastic news for small businesses, and we’re very pleased with the results our two main loan programs showed,” said SBA Administrator Hector V. Barreto. “It is further evidence that small businesses are continuing to power the economy and create jobs.”
The SBA flagship 7(a) loan program handed out a total of $14 billion in financing. Small businesses use these loans primarily for working capital.
In the Certified Development Company loan program, also known as the 504 program, loans were made for $4.9 billion. The number of loans was up 16 percent compared to last fiscal year. The loans are used to buy or rehabilitate fixed assets such as land, buildings and machinery, and equipment.
Minority and women business owners made headway in getting SBA loans. Minorities received $5.8 billion in 7(a) and 504 financing, an increase of 26 percent over the previous year. Women received $3.3 billion in 7(a) and 504 financing, representing 17 percent of total dollars, an increase of 27 percent over the previous year.
What You Can Do
Do you want a chunk of the SBA’s loan money for your small business next year? If so, here’s some information you need to know.
The SBA doesn’t make grants or lend money directly. But through authorized lenders, the agency does guarantee bank loans to small businesses. You apply for an SBA-guaranteed loan through a partnering financial institution. The lender asks the SBA to back the loan. To get an SBA loan, you need to prove yourself credit worthy. And you need a written business plan that covers all of the right angles. You can find out about SBA loan programs and how funding works at www.sba.gov/financing. The SBA Microloan program provides short-term loans of up to $35,000 for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery and equipment. The basic (7a) loan guaranty helps qualified small businesses obtain financing when they might not be eligible for business loans through traditional lending channels. Financing under this program can be guaranteed for a variety of general business purposes. Certified Development Company (504) loans provide growing businesses with money to buy land, buildings, machinery and equipment.
An SBA loan might or might not be right for your small business. To learn about different types of business funding, check out the free online Success Skills Seminar from the National Association for the Self-Employed. The seminar, “Find Financing For Your Business,” is online now at http://www.entrepreneurialconnection.com.
Topics include:
Traditional lenders Government sources Venture capitalists What lenders want
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(Posted December 2005) |
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