Patriot Express for businesses that are 51 percent or more controlled or owned by members of the military or veterans.
2. Export Loans include Export Express which provides a streamlined application method for loans. Export Working Capital Program for businesses that generate export sales and need capital to support and increase these sales. The International Trade Loan Program that is for start-up exporting businesses or for businesses that have been adversely affected by competition from imports.
3. Rural Business Loans include the Rural Lender Advantage for the needs of small rural-based lenders to simplify the loan application process mainly for small SBA loans.
4. Special Requirement Loans for businesses that:
This program helps small businesses get the capital they need to maintain an existing business and allow it to grow. Banks and other lending institutions may not be willing to loan to certain businesses, but with the SBA 7(a) Loan Program the risk is shared with the SBA.
The SBA 7(a) Loan Program offers a very basic, common type of loan. For working capital loans, maturity is up to 10 years and for fixed assets it is up to 25 years. These loans are available for a variety of business purposes including:
The commercial lending institutions that participate in the program are most American banks and some other lenders, so the availability of loans is quite wide. The lenders structure the loans according to the requirements of the SBA and, after applying, receive a guaranty from the SBA for part of the loan. The lender and the SBA share the risk that the borrower will not fully repay the loan. This guarantee is only for payment default, it is not for any misrepresentation by the borrower or for imprudent choices by the lender.
The lender must make a prudent choice. The business applies directly to the lending institution for the loan, and the lender decides if they will award the loan or request a guaranty from the SBA. If the borrower defaults on their repayments, the SBA will reimburse the lending institution for whatever percentage they offered guaranty.
There is a lot of incentive for lenders to participate in the SBA 7(a) program. They can increase liquidity by selling the loan on a secondary market, increase their regulatory loan limit because the guaranteed part of the loan does not count on the regulatory limit per customer, and it gives lenders a desirable product line for prospective borrowers.
The requirements for eligibility for a SBA loan are designed to be very broad so that a diverse variety of financial needs can be accommodated. The business requesting a loan must:
With the SBA 7(a) loan, small businesses have a great advantage to build their business to a competitive level. Lenders around the United States participate in the program and it is to their advantage to award loans to sound businesses that need working capital to grow. Borrowers need to evaluate their situation and determine what kind of financial help they need. With a good business plan, cash flow projections and copies of their tax returns for the past three years they have a very good chance of getting the cash they need.