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The federal government has programs available through the Small Business Administration (SBA) to help small businesses get needed financing. Unfortunately, all too often potential borrowers feel overwhelmed and confused by the process of getting an SBA loan. In fact, a recent Capital One small business survey found that while 79 percent of small business owner are aware of the existence of such loans, only nine percent have ever applied for one. Among the few who have applied, 73 percent said the process was either somewhat or very complicated.

“It’s clear that beyond delivering great products, we must educate small businesses on the best ways to adopt and leverage those products – and help demystify the more complex or technical resources out there, like SBA loans and mobile technologies,” said Keri Gohman, Capital One’s small business banking in a statement.

So what is there to “demystify”? For starters, SBA loans are not made by the government, they are guaranteed by the government. That means that when you get an SBA loan from your local lender, the SBA promises to repay your lender up to a certain amount if you default on the loan at any time.

Second, SBA loans require a great deal of paperwork compared with traditional loans. And because of all the information to be reviewed, the acceptance process can take up to a month. The SBA is working on streamlining the paperwork puzzle and has promised a new type of loan as early as 2015, but for now borrowers must be patient in applying for SBA help.

Third, the SBA offers four basic types of loan guarantees. The 7(a) is the most common type of loan for small businesses with limits up to $5 million. The microloan offers shorter-term loans in amounts up to $50,000. There are also CDC/504 loans for real estate and equipment purchases and the SBA offers disaster loans to help small businesses affected by natural or other disasters.

While the process may seem complicated at times, SBA loans can provide very valuable capital to small businesses. Just be prepared to put in some time and persistence in order to realize the benefits.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources