How To Get A Government Business Loan?

How To Get A Government Business Loan?

If you are in the stage of opening up your business, the most important thing you would require is the money. No matter how brilliant your idea is, or the execution of that idea is, if you do not have money, you cannot at all start a business. However, do not get disappointed, because here is a solution for this problem. There are numerous options available to get the required money and one of them is getting a government business loan. Now you may definitely be thinking how to get a government business loan? So, to answer all your questions, here is an article, which will acquaint you completely about the various aspects of the government business loans. Therefore, just read on.

how to get a government business loan

There are primarily three types of government business loans, namely: Federal, Local & State. These are there to assist you in your business in getting up and expanding. The best known government leading agency in the United States for the government business loan is SBA, also known as Small Business Administration. However, the SBA never actually gives direct loans to businesses, but works by lending the institutions and seeks the guarantee for the repayment of the loans. Hence, let us understand how you can get the loans through SBA or Small Business Administration so that your business can expand and prosper in the future.

Identify Your Loan Requirement

The first thing you need to do to get the loan is to identify your requirements and reasons. There are numerous situations for which you can ask for the loan through SBA. Let us have a look on some of those situations:

  • If you want to purchase new machinery, parts, equipments, supplies, etc.
  • If you want to finance the improvements of leasehold
  • If you want to refinance the current debt
  • If you want to establish a line of credit
  • If you want assistance from disasters

Therefore, these are some of the situations, which you can consider while planning to get a loan from SBA or Small Business Administration.

Check The Website Of SBA or Small Business Administration

 Once you have decided your requirements and reasons of getting the loans, visit the website of SBA to check for all the available loan programs. You can click here to go to SBA’s website. Below is the list of some of the most common programs that are good for the small businesses.

7 (a) Loan Guarantee Program

 The first in the list is 7 (a) Loan Guarantee Program. The primary aim of this program is to help the small businesses that are at the starting or expanding phase. The maximum loan amount is around $5 million.

MicroLoan Program

This program is primarily used for the short-term purposes, for example, if you want to purchase goods, transportation, computers, furniture, etc. In the MicroLoan program, the amount is strictly fixed, you cannot demand for more in this program. The amount is $50,000.

504-Fixed Asset Program

If you want long-term financing at a fixed-rate, 504-Fixed Rate Asset Program is for you, especially, if your business model is directly benefitting the community. The amount that you can ask for loan is up to $5 million.

Business Disaster Assistance

The fourth program is the Business Disaster Assistance program. It is primarily taken when you need the repair or replacement in your inventories, real estates, machinery, equipments and other types of losses that are physical. There is a limitation in the business loans to $2,000,000 and the loan cannot be more than the verified disaster loss that is uninsured.

Check Whether You Are Eligible For the Loan Or Not

This is the most important task that you must do very seriously before you apply for the loan. Each program of the government loans has the eligibility requirements. Some of the basic eligibility requirements include

You are operating your business on the profit

You have to really BE SMALL, as per SBA guidelines. The size is decided on the basis of the revenue and the number of employees.

You must use other financial resources, for example personal assets, before your seek financial assistance.

You must be able to demonstrate the need for the loan you want

How To Apply For the Loan?

Once you are done with the necessary procedures, as mentioned above, fill out the application form properly. Do not make any mistake at all in the application form and enter all the required information correctly. Aftermath, search for someone who is the preferred lender of SBA. As already informed, SBA does not give the loans directly; you will have to find some bank or the lending institution, for example, Credit Union, to get the loan. You can get the list of preferred lenders of SBA from the SBA website.

Once you have chosen your lender, it is the time to meet them. While meeting them, it is advisable that you keep in mind certain things, for example, you are dressed in complete professional attire. You have all the required documents, which include, two copies of the business plan including the financial projections. Make sure you are ready with all the answers that are especially related to your business. If the lenders are happy with you and think that you are the potential borrower, they will definitely give you the loan package of SBA.

Therefore, it was all about getting the government loans for your business. As you know that, there are numerous loan programs, it is advisable that you research thoroughly and then decide the right program for you.

Category Loans

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