How do I obtain a loan from the SBA?

When you apply for a loan to start your new business or to expand your current business and are unable to secure that loan from a bank, assistance could be available from the Small Business Administration (SBA).

The SBA does not provide funding for direct loans nor does it provide grants/low interest rate loans for business start-up or expansion. The SBA does, however, enable its lending partners to provide financing to small businesses when funding is otherwise unavailable on reasonable terms by guaranteeing major portions of loans made to small businesses. The eligibility requirements and credit criteria of the program are very broad in order to accommodate a wide range of financing needs.

Here's how it works: When a small business applies to a lending partner for a loan, the lender reviews the application and decides if it merits a loan on its own or if it requires the additional support of an SBA guaranty. SBA backing on the loan is then requested by the lender. In guaranteeing the loan, the SBA assures the lender that in the event the borrower does not repay the loan, the government will reimburse the lending partner for a portion of its loss. By providing this guaranty, the SBA is able to help tens of thousands of small businesses every year get financing they would not otherwise obtain. To qualify for an SBA guaranty, a small business must meet the SBA’s criteria and the lender must certify that funding could not be offered on reasonable terms without the SBA guaranty. For additional information, visit the SBA’s Web site (www.sba.gov/financing).

Richard Strug
Greater Princeton Area SCORE (Chapter 631)
Serving Mercer and Middlesex Counties