Each year the Small Business Administration backs more than $15 billion in small business loans. In addition, they also assist with billions of dollars in business disaster loans, and also help business owners secure federal contracts. Note that the SBA does not usually loan directly. Instead, they back loans which are administered through non-profits and banks throughout the United States. Interest on SBA loans is limited by the specific program at a maximum rate above prime. As these rates are subject to change, it is best to visit SBA.gov or speak with your local SBA district office to get the most current information on rates. Note that the SBA prohibits your lender from charging you processing fees, application fees, points or origination fees when applying for any SBA program.

Startups and small businesses in need of working capital may be eligible for SBA microloans. Under this program, the Small Business Administration makes loans to local non-profits who in-turn make loans to business owners seeking $35,000 or less in funding. These loans are administered like a line of credit. Although business owners may not use the funds to pay existing debt, they may use a microloan for working capital, purchase of equipment, or supplies. Although specific to the non-profit that is issuing the loan, there may be an additional requirement for the business owner to attend training on how to appropriately use the loan. Additional resources such as help with bookkeeping may also be available, so be sure to ask.

Eligibility

SBA Microloans are not available to every business. The typical profile is the startup business owner that would not otherwise qualify for a bank loan. Such as a first-time borrower, an individual with a lower credit score or someone with little collateral.

How to apply…

Business owners should contact their local district office of the SBA to inquire about sources of SBA Microloans in their area. Visit: http://www.sba.gov/about-offices-list/2

What if you do not qualify…

If you do not qualify, seek alternative options for getting your business funded. You may qualify for other SBA programs, bank loans, or social funding programs. If your business is involved in exporting goods from the US to overseas destinations, be sure to ask your SBA office about alternatives as new funding programs have recently been established to encourage exports.

A great way to learn more about all aspects of business financing is to read up on the basics. Visit: http://www.smallbusinessloansecrets.com

Lin Jenkins is a frequent author of business articles, and owner of Gold Alliance Group. Visit her site to read business tips articles or to buy ebooks online on a variety of small business topics.

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