Government Business Loans & Grants (Overview)

Small Business Loan Programs

The Small Business Administration is Congressionally mandated to assist the nation’s small businesses in meeting their financing needs. The agency’s mall business loan programs enhance the ability of lenders to provide long- and short-term business loans to small businesses that might not qualify through normal business loan channels.

There are basically four types of Small Business Administration business loan and equity investment programs available: the 7(a) Business Loan Guaranty Program, the 7(m) MicroLoan Program, the 504 Certified Development Company Business Loan Program and the Small Business Investment Company Program.

How It Works?

You submit a business loan application to an SBA participating small business lender for initial review. If the business lender approves the business loan subject to an SBA guaranty, a copy of the business loan application and a credit analysis are forwarded by the business lender to the Small Business Administration.

Following SBA approval, the business lending institution closes the business loan and disburses the funds to the small business owner. The small business owner makes monthly loan payments directly to the business lender.

No balloon payments, loan application fees or points are permitted with 7(a) business loans. The small business lender can tailor the repayment plan for each small business.

Use of Proceeds

A start-up small business or existing small business may use the proceeds of a 7(a) guaranteed business loan to —

  • expand or renovate facilities;
  • purchase machinery, equipment, fixtures and leasehold improvements;
  • finance receivables and augment working capital;
  • refinance existing debt (under some circumstances);
  • finance seasonal lines of credit;
  • construct commercial buildings; and/or
  • purchase land or buildings.

SBA Loan Prequalification Program

The SBA Small Business Loan Prequalification Program is offered to armed forces veterans, minorities, women, exporters, rural small business owners and business owners in certain specialized industries, this small business loan program enables the SBA to pre-qualify an applicant for a 7(a) loan guaranty before the applicant goes to a bank.

504 Certified Development Company (CDC) Program

The 504 Certified Development Company Program provides growing businesses with long-term, fixed-rate business loans for major fixed assets, such as land and buildings. Approximately 270 CDCs nationwide work with the Small Business Administration and private-sector business lenders to provide financing to small businesses. CDCs are nonprofit corporations set up to contribute to the economic development of their local communities.

Low Documentation Loan (SBALowDoc)

SBALowDoc is the Small Business Administration’s quick and easy small business loan program that provides a guaranty on small business loans of $150,000 or less. You complete the front of a one-page business loan application. The agency processes completed loan applications within 36 hours.

SBAExpress Loans

SBAExpress Loans provide small business loans of $250,000 or less. The SBA provides a rapid response through its PLP processing center in Sacramento, Calif.— within 36 hours of receiving the complete application package. Lenders use their own procedures to approve and service the loans.