In order to get a small business started, or keep one running, many entrepreneurs need some outside capital. Based on assets and income it can be difficult for these fledgling companies to qualify for standard loans. The Small Business Administration (SBA) helps many of these borrowers find the financing they need by guaranteeing a large portion of their loans.

Nearly 60 years ago, the SBA was created by the U.S. Congress to encourage more lending to small business owners. The SBA does not actually make loans itself, but it guarantees loans made by private lenders that fit specific criteria.

Small business owners begin by contacting a participating SBA-loan lender and applying for an SBA loan. As long as the applicant meets the credit and collateral requirements, the lender will make the loan with the assurance that the SBA will guarantee up to 85 percent if the borrower defaults in the future.

The SBA guarantees a host of small firm loans, all related to keeping businesses thriving. Among them are the following:

7(a) Loan Program

This is the SBA’s main loan program for helping businesses get started or expand. Loans of up to $150,000 can be guaranteed up to 85 percent, and the SBA can guarantee up to 75 percent of loans above that amount. The maximum guarantee limit is $3.75 million and all loans must be repaid within 25 years.

CDC 504 and Microloan Programs

The Certified Development Company (CDC) 504 loan helps non-profit businesses pay for major assets like land and structures through long-term financing, while microloans are loans of less than $50,000 made by nonprofit community lenders to start-up and growing local businesses.

Disaster Loans

Private and nonprofit businesses and charities can receive SBA loan aid after their area is declared a federal disaster area. The money can be used to help repair or replace things like buildings, supplies and machinery. Even individuals can often qualify for SBA disaster loans, for help in repairing homes and replacing belongings after a major catastrophe.

Export Assistance Loans

For businesses doing international trade, the SBA offers the Export Express, Export Working Capital, and International Trade Loans. The Export Express is a streamlined program for businesses to quickly secure up to $500,000 for their exports. Local lenders can use their own eligibility standards and the SBA will respond within 36 hours. The other two loans can provide up to $5 million for export assistance but require more application scrutiny.

Military/Veteran Loans

The SBA offers help to veterans and active military personnel in the form of Patriot Express loans and Military Reservist Economic Injury Disaster Loans. The first can help veterans or military employees obtain quick funding for creating or expanding a small business. Like the Export Express loan, businesses will receive a response within 36 hours. Military Reservist Loans are designed to sustain businesses suffering economic hardship due to an essential employee leaving for active duty as a military reservist.

Special Programs

Under the CAPLines loans programs, the SBA provides assistance for the short-term or cyclical needs of small businesses. Community Adjustment and Investment Program (CAIP) loans are intended to help businesses who are negatively affected by NAFTA. The SBA also sponsors Employee Trust loans to help business owners with the costs of Employee Stock Ownership Programs.

Information courtesy of the Small Business Administration.