The SBA facilitates funding for businesses that are otherwise deemed risky by ordinary lenders. However, the SBA does not lend directly to businesses. It channels the funding through commercial lenders.
When a business applies for an SBA loan, the SBA works with a commercial lender to avail this funding. The SBA guarantees the loan, such that in the event of a default by the business, the SBA repays part of the loan to the lender.
There Are Several Types Of SBA Loans:
- SBA Express facility – This is a funding facility for business needs up to $350,000. No collateral is required for loans up to $25,000
- The 7(a) loan program – for a variety of usual business expenditures including boosting working capital
- Export assistance loan for business exporting from the US
- CAPline loan to boost seasonal working capital
- CDC/504 loans to buy major fixed assets including land and heavy machinery
- Disaster loans to help businesses recover from major natural disasters
Apart From Loans, The SBA Helps Business Owners In Other Ways Including:
Government contracts assistance
This is also called the 8(a) Business Development Program. It targets businesses owned by minorities, to help them access lucrative government contracts. For a business to qualify, it must be 51% owned by a person(s) described as:
- African Americans
- Hispanic Americans
- Native Americans
- Asian Pacific Americans
- Subcontinent Asian Americans
Research And Development Support
The SBA runs an innovation support program; the SBIR /STTR grant. SBIR is Small Business Innovation Research while STTR stands for “Small Business Technology Transfer.” The SBIR fund comes from 12 government agencies but is coordinated by the SBA. The STTR supports formation of private/public partnerships for businesses to access more resources from public bodies.
Training And Mentorship
The SBA supports training of small businesses in areas such as business planning, fundraising, marketing, and HR recruitment and so on. This is run through SCORE chapters which are all over the US. The SBA also runs an online information center for businesses which have the following facilities:
- SBA Tools – This has a variety of tools for small businesses
- SBA learning center – There are a variety of online learning courses for business owners
- SBA development centers – A program in partnership with different academic institutions in 900 locations to train small business owners.