Government Funding for Small Business through the SBA

Many successful entrepreneurs got their start in the business world because they learned how to apply for government funding for small business. Any individual who sees themselves thriving as a small businessman or businesswoman in the near future rather than working as an employee for a big corporation should investigate how to secure government funding to help fund their small business dreams. And the best and first resource to get started is the Small Business Administration. Also known as the SBA, the Small Business Administration offers a guaranteed loan program to provide funding for small business that have not been successful at securing money to launch a new business or expand an existing one through traditional commercial loans.

How to Qualify

Government Funding for Small Business through the Small Business Administration is targeted at those businesses who have been unsuccessful at securing money from traditional sources such as private lenders or bank loans. The SBA cannot consider granting any funding for your small business until you have first tried and failed at securing a loan through traditional means. But once you can prove that traditional lending institutions will not fund your enterprise, you are ready to begin the application process to apply for an SBA loan for government funding. The beauty of getting an SBA loan is that the government funding is guaranteed so there is a much higher chance you can qualify for government funding even if you have been denied a traditional commercial business loan.

Come Prepared

There are a number of documents that any individual seeking government funding for small business should have ready when meeting with a lender approved by the SBA. Your likelihood of securing government funding is greatly enhanced if you have a well written and well thought out business plan, financial statements for the business, personal financial statements for you as the business owner and any partners or family members who are involved in the business or have a financial stake in the business, the exact amount of the loan being requested, a description of any collateral to secure the loan including property, cash flow and real estate holdings, and the professional resumes of the business owner and any operating partners directly involved with the business' day to day finances. The lending officer can provide you with a checklist of all the documentation that will be required in order to apply for government funding and these include but are not limited to personal and business tax returns for the past 3 years, a certificate of doing business, a balance sheet for the business and profit and loss statements.

Variety of Loan Programs and Rates

After meeting with the lending institution offering government funding for small business through an SBA loan, you will be guided to one of several loan programs that best match your needs. One of the most popular means of funding businesses through the SBA is the 7(a) Loan Program that is funded by a regular commercial lender such as your community bank but is backed and secured by the Federal Government. Microloan programs may be recommended to you if the amount you need to borrow is small, less than $35,000, and can be repaid within a relatively short amount of time. The SBA also offers a Disaster Assistance Loan Program that can be used to secure government funding for small business in a region where a natural disaster such as flooding, earthquake or hurricane has occurred and businesses endure property damage and loss of income because of such a disaster. Rates for SBA loans are determined by the amount of money loaned and the term of the loan for repayment.