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Small Business Loans – The Personal Guarantee Issue

Posted by admin on December 30, 2011 at 6:26 am in Finance
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Small businesses are the backbone of our modern economy. That being said, they suffer from the Rodney Dangerfield problem – they don’t get any respect. Whereas lenders will give huge companies boatloads of cash without a second thought, they often will not give small businesses the time of day. That is, of course, unless a personal guarantee is involved.

As a general rule of thumb, it is highly recommended that you do not personally guaranty your business unless you are in desperate need of money to keep your business going. If your business goes belly up, a personal guaranty will allow a bank to come after your personal assets. The first thing that you stand to lose is your home as it will often be the largest asset that can be liquidated to pay off your business loan. By personally guaranteeing a loan, you circumvent any protection provided by incorporating.

An even worse situation presented by a personal guaranty can arise if you are married. If you are married and have personally guaranteed your business, it is very possible for the bank to go after the personal assets of you as well as your spouse which will essentially strip your family of all its personal assets. That makes for a tense dinner.

The reality is that many business owners have no choice but to pledge their personal assets in order to secure a loan for their business. Banks will usually flatly refuse your loan application if you express your desire to not personally guarantee a loan. Even the SBA or the Small Business Administration states that an applicant who has more than a 20% stake in a business will have to personally guaranty their business loan to be eligible for a guaranty from the business. As you might already know, the SBA is often the last resort for business owners who have been turned down by banks.

Personal guaranties are often the factor that will decide the approval of a loan simply because the bank will feel much more confident about lending to you when you have your personal assets on the line. It will expect you to work much harder for your business when you have a vested interest.

Nobody said owning your own business would be a piece of cake. It isn’t. You’ll surely realize that when faced with the personal guarantee issue the first time. You should make every effort to avoid signing one, but should also realize that most small business owners end up doing so.

By: Thomas Ajava

Small Business and President Obama’s Stimulus Package

Posted by admin on December 29, 2011 at 8:49 pm in Business
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Recently the credit freeze has had effects on every area of the economy, including small businesses. Small business owners and entrepreneurs, both those in the business and those who are trying to make a fresh start after losing their jobs, are out of money and energy. They are looking to the government for help.

With the formation of his stimulus package, President Barack Obama is clearly hoping that he will give the financial assistance needed to get small businesses to act in a way that will boost the failing economy. The president has assured Americans that he is going to make sure credit is given to entrepreneurs and business owners. His administration believes that small business is the key to the economic recovery as they create about 70% of new jobs each year.

The stimulus package, officially the American Recovery and Reinvestment Act of 2009, became law on Feb. 17, 2009. It involves spending $787 billion in incentives and tax cuts with the goal being to kick-start economic growth and create new jobs in the next three years.

Obama has shown that he is committed to small businesses, increasing the budget of the Small Business Administration by 100% and giving out over $6 billion in small business loans since the package went into effect. Recently it has been suggested that bailout funds earmarked for banks may be diverted to small businesses. This would surly signal a shift in focus.

Many of our clients, having read about the plan in the newspaper or having heard about it on the T.V., are ready to accept the government’s promise. Legal professionals will have to help them sort through the messages and find the facts in order to help evaluate the pros and cons of the U.S. government’s Financial Stability Plan.

By: Bryan Hendersen

Using Multiple Sources of Small Business Financing

Posted by admin on December 26, 2011 at 1:03 pm in Finance
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One misconception about starting a small business is that the only way to receive small business financing is through a bank. Though the bank is a viable option, it is not the only option. Looking towards multiple sources of financing can get your small business the financing it needs. Alternative sources of financing can be used instead of, or in addition to a bank loan. Using multiple sources of financing can help a new or veteran business owner maximize his/her business’ working capital.

Listed below are a variety of small business financing sources, that small business owners can utilize when building, expanding and maintaining their businesses.

Small Business Administration

The small business administration was created to help small businesses get on their feet and remain on their feet. Their mission is “…to maintain and strengthen the Nation’s economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters.” So why not look to the SBA for assistance?

The most common SBA loan program is the basic 7(a) loan program. This program is specifically designed for small business owners who may not be eligible for business loans through normal lending channels. Other loan programs offered by the SBA include the 504 Program, which provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings, Micro-Loans that provide very small loan amounts for startup small businesses, with a maximum loan amount of $35,000. Disaster Recovery Loans, which can assist in the recovery of your business if it is involved in a disaster, and Special Purpose Loans, that can be used for any special purposes within your business.

Grants

Just like there are scholarships available for just about anything, if you do enough searching, you could find the small business grant that works for you and get free money to finance your business. Though the federal government does not offer grants to small business owners, there are numerous other grants available for small business owners. You can look to your own state to find free funding your small business. Every state has a state development agency, and many of these agencies offer small business grants, and/or information on where to find them.

Small Business Cash Advances

Though a small business cash advance is not plausible for startup businesses, it can be used after your business has been up and running for a period of time. A business cash advance can offer fast and easy-to-obtain money for your small business’ financial needs. With few requirements, even business owners with average or fairly below average credit scores can qualify to receive a business cash advance.

Financial Intermediaries

A financial intermediary is a person who specializes in finding funds for business owners. Once you’ve done all you can to find money for your business, try hiring a financial intermediary to find the funds that you may have overlooked.

You can decide to use the expertise of a financial intermediary in order to give yourself the time to work on other aspects of your business, or you can use them in combination with your own expertise; as the saying goes, two heads are better than one.

Financial intermediaries can also be used to help in the start up of your business, offering help with the writing of business plans, proposals, etc.

By: Gaston Castro

SBA Loans and the New Small Business Bill

Posted by admin on December 21, 2011 at 9:49 am in Business
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Near the end of September 2010, President Barack Obama signed a Small Business Bill into effect. The new bill set aside $30 billion for small business lending. The law also includes $12 billion in tax breaks for small companies. This bill was signed into effect as a response to the 9.6 unemployment dissent in America. President Obama and the administration signed the bill to demonstrate an effort to decrease the unemployment levels in the United States. President Obama hopes that the loan will create as many as 500,000 new jobs within the next couple of years.

Small Business Jobs Act 2010 Changes

The Small Business Jobs Act includes the Recovery Act Loans Extension that provides $14 billion in lending support. Small Business Administration (SBA) Recovery loans will be extended under the law with a 90% guarantee and reduced fees. At the time that the bill was signed, 1,400 small businesses were waiting for funding. Since the signing of the Recovery Act, 70,000 Recovery loans have been supported. Over $680 million dollars have created $30 billion in lending support.

The bill supports higher loan limits, and the maximum loan sizes increased in the pre-established loan programs. The new bill also increases the 7(a) and 504 loan limits from $2 million to $5 million. Manufacturers may receive up to $5.5 million. The 7(a) loan program is one of the most flexible loan programs offered for start ups and existing small businesses. Most of these loans are gained through commercial lending institutions. The 7(a) loan program includes an Export Loan program and a Rural Lender Advantage program. Some businesses will be able to refinance and incorporate their commercial real estate mortgages into the 504 loan program. However, this only applies to owner occupied units.

Microloan limits increased from $35,000 to $50,000. These loans are designed to help entrepreneurs with large start-up companies and small businesses owners in underserved communities. The new bill also increases small business eligibility for SBA loans. They make this possible by increasing the “alternate size standard” to small businesses with less than $15 million in net worth. This also applies to those businesses with less than $5 million in average net income. The law also increases the amount of Small Business Administration (SBA) Express loans from $350,000 to $1 million. Working Capital and Commercial Real Estate Refinancing received temporary enhancements to assist small business owners.

Tax Cuts

The tax cuts include the following:

- More Deductions for Start Ups
- Deductions for Cell Phones provided by the Employer
- Self Employed Health Insurance Deductions
- Penalty limitations for small business tax reporting errors
- Accelerated or Bonus Depreciation
- Provisions for up to Five Years of Net Operating Losses
- Up to $500,000 for Small Business Expenses: The Highest Expense Ever

Fees Associated with the SBA Loans

Fees are assessed to offset the costs of the SBA loan to the taxpayer. Lenders are charged a guaranty fee and servicing fee for each approved loan loan. The fees are a percentage of the amount loaned to the borrower. The lender may charge the guaranty fee upfront. However, the borrower is not responsible for the lender’s annual fee.

ARC Loans

ARC Loans are small business loans that do not carry any associated fees. In the past, the fees for loans were between 1% and 3.5% of the total cost of the loan. ARC loans offer 100% guaranty from the SBA to the lender. No fees are required to be paid to SBA. Many of these loans are provided over a six month period. The repayment of the principal of the loan may be deferred for 12 months after the final disbursement of the loan. Repayment may last as long as five years. The best candidates for this type of loan are companies that have been profitable in the past, but are currently struggling. These companies may have begun to miss payments recently because of financial hardship. These funds may be used to make payroll, buy inventory or improve core operations.

7(a) Loans

Lenders will be charged an annual fee of 0.55 percent of the guaranteed portion of 7(a) loan. The fee will only be assessed to the balance of the loan and not the entire loan amount.

504 Loans

Borrowers will pay an annual fee of 0.749 percent on the outstanding balance of the 504 loan. This amount increased from 0.389 percent. Loan interest rates may not exceed 4.75% and may be as little as 2.25% when negotiated through a bank.

How Long is the SBA Loan Process?

Since the Small Business Administration is a guarantor and not a lender, the amount of time required to approve the loan will vary. The Small Business Administration attempts to reach its decision within seven to 21 business days from the receipt of the application. To accelerate the process, applicants should have several components of their application in place.

The length of time it takes for the SBA to respond to the application depends on the loan program your business elects to apply to. A business plan with financial statements is required for all loan programs. Earnings projections and collateral offerings must be established. In general, the SBA microloan is the least time consuming application and will be approved the fastest. The maximum loan amount was increased to $50,000. The funds cannot be used to buy property or pay debt.

Top Five SBA Loan Lenders

The banks have sorted SBA lending by region. Some of the most prominent banks involved in lending are the following:

Wells Fargo Bank

Wells Fargo managed a No. 1 ranking between October 1, 2009 and September 30, 2010 for the Small Business Administration 7(a) loan. The bank issued 91 SBA loans with a total value of $31.9 million. The bank was the second leader in terms of ARC loans. The bank issued 23 loans for a combined value $710,100.

JPMorgan Chase Bank

Chase Bank issued 33 ARC loans with a total value of $935,100. They ranked No. 1 in this category of loans issued.

Mortgage Capital Development Corporation

This particular bank issued the most 504 SBA loans. Businesses may use these loans for real estate purchases, property constructions and upgrades.

TMC Development

This bank issued 71 SBA loans for a combined value of $54.1 million. Nearly, 56 of these loans were 504 loans. The loans had a total combined value of $48.9 million.

Capital Access Group

Capital Access Group issued 51, 504 loans for combined value of $37 million.

Rates of Top Five SBA Loan Lenders

Wells Fargo

Typically, 3.5% of the SBA amount is due at the time of the loan. However, the fee may be financed. An origination fee may include bank fees. A fixed or variable interest rate will be negotiated by the bank for the Wells Fargo portion of the loan.

Chase Bank

A guaranty fee of 1% to 3.5% of the guaranteed amount must be paid by the lenders. The lender must also pay the annual fees of 0.25%. The lender may pass the guaranty fees onto the lender, but not the annual fees.

Mortgage Capital Development Corporation

This bank charges 0.389% of the balance of the loan for fees.

TMC Development

Most 504 loan programs will pay up to 90%. Therefore, most borrowers only have to make a 10% down payment. This bank offers a 4.39% interest rate to those seeking a loan. The fees are typically 1% or less.

Capital Access Group

Businesses may get up to 90% financing with a SBA loan. The interest rates are 4.40%. The fees are typically 1% or less.

Copyright (c) 2010 Trey Markel

By: Trey Markel

How Does SBA Loan Counseling Work?

Posted by admin on December 21, 2011 at 5:58 am in Finance
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A small business administration Counselor can assist you in getting a SBA loan in the following ways. First of all they can sit you down and discuss your business plan if you have one and if you do not have one they can help you to create a new business plan for your business. Having a business plan is instrumental in your success as this will demonstrate where you are spending too much money and will also show you where you are not spending enough money.

It is important to understand what your costs are and how they will affect your profitability you are attempting to be a successful business. It is also important demonstrate your cost if you’re looking for a loan as the financial institution which lends you the money whether it be a traditional lender such as a bank for a nontraditional lender will want to have this information before they feel comfortable lending you money. Furthermore your counselor can explain to you the impact on your company from obtaining a specific loan, what you can expect in terms of minimum payments and what interest rate is appropriate for your circumstances.

Remember that this service is free and although it is very high quality you may wish to seek out other professional advice from for-profit organizations. Different organizations have different abilities to assist you with your financing needs and it is important to consider all your options. There are also a number of nonprofit organizations which are designed to help businesses in America specifically start their companies.

These nonprofit were organized in an effort to stimulate United States economy and there are many highly trained volunteers which work for them. Remember that many of these volunteers are in fact professionals spending some of their spare time to work at these nonprofits and as such they have all of the necessary industry information to assist you in your questions. Whichever option you choose you should make sure to always get a second opinion and that you fully understand what it is you are agreeing upon before you sign up for any type of loan an SBA loan or otherwise.

By: Tuesdee Hasson

There’s Good News For People Who Need Commercial Loans to Run Small Businesses!

Posted by admin on December 20, 2011 at 7:40 am in Finance
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Recently, a legislation that received the US President’s approval has made things easier for small businesses as it extended the federal initiatives that increased the affordability of Small Business Administration loans.

If you run a business, you know that there are times when you suddenly need money to pay employees, acquire assets, or meet overhead expenses. In such a case it may not be possible to go through the lengthy process of getting a loan from a lending institution that grants credit only after a lot of paperwork has been completed. If you find yourself in such a situation you need not panic, all you need to do is take a loans from an institution that grants loans without much fuss. They will make the money available in the form of cash credit or other loans. These institutions also offer credit to people who want to start new businesses. You may find such institutions through the internet.

If you are already running a business, you may apply for a loan on the basis of your business expansion plans and your credit report. Remember that the lending institutions may take into account your personal credit scores while deciding whether they ought to grant the loan or not. However, it is possible to get a commercial loan even if you do not have a great credit report.

Commercial loans that are taken to run businesses are also referred to as working capital loans. Equity loans are most commonly taken. One may even obtain credit in this form from friends and other well-wishers. A trade creditor may be willing offer a loan to businesses that have high credit scores. If you have a good credit score, you may also approach a bank for a bank line of credit. In this case, the bank extends credit for an entire season to a firm to purchase inventory.

In some cases the development of a firm is dependent on the kind of real estate that it has. If you feel that a commercial loan could help you to profitably use space in commercial properties like office building, manufacturing factories, health facilities, or shopping malls. You may either or for the short term or long term varieties of these loans. The long term varieties often involve and are taken for the lifetime of the lease. However, you must be careful while applying for such a loan because these commercial loans are not very liquid.

Good lending institutions may be contacted through the internet for convenient commercial loan.

By: Devendra Mishra

The Intelligence Community and Small Business Contracting – Small Business Set-Asides

Posted by admin on December 17, 2011 at 8:58 am in Business
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The Role of Small Business in Government Contracting

Contracting for the Federal Government is a major industry and small contractors play an important part. Because smallcontractors tend to be more innovative and agile, they provide goods and services that the Government requires on a cost effective basis. Small companies contract directly with the Government (usually under set aside programs) or as subcontractors through large prime contractors. When subcontracting, small contractors are relied on to provide unique technical expertise, knowledge of a particular customer or recruiting capabilities as added value to the efforts of a prime contractor.

In addition, as a matter of policy and to further encourage competition specific small business guidelines have been put for the by administration since the end of World War II. The Small Business Administration (SBA) was created to help small companies to grow their Federal Contracting business.

Included in the many SBA programs are loans to small firms, contracting set aside programs and monitoring of federal Contract Goals for prime contracting and subcontracting. The programs and goals served to stimulate a robust small enterprise contracting environment and many experts believe benefited Federal Government Agencies.

Recently however, small contractors have suffered as a result of a number of factors. Based upon reduced contracting budgets, a general mistrust of the contracting community, increased expansion of government hires and general growth of the federal and state governments, contracting activity was significantly reduced. Direct contracts to small firms were replaced by insourcing (bringing work back into Federal Agencies to create work for newly hired government employees) and the resulting cancellation of large prime contracts has caused a disproportionate reduction of the small business work force. When prime contracts were cut, small contractors suffered most.

An addition problem that small companies face was the change in the award protest rule. Protest threshold levels were reduce to $10 million and protests of task orders under existing multiple award contracts were allowed. This practice significantly reduced the number and amount of contract awards as losing bidders gained advantage by slowing down the award process.

Recent Administration Guidelines – Policy Issues

In April 2010, perhaps realizing that an innovative and agile small contracting community was a national asset to be preserved, the Obama Administration concluded that small business contracting goals were being missed by a wide margin and commissioned a special panel to review the problem and develop solutions. The impact of this move should prove to rejuvenate the policy of encouraging small business contracting and hopefully will improve the business environment for small contractors.

Small Business Contracting and the Intelligence Community

Presently, only Intelligence Agencies associated with the Department of Defense (NSA, DIA, NGA and the services) have small business programs and contracting goals. The goals are estimated to be about 23% of all contracting business set aside for small business. Civilian Intelligence Agencies like CIA and NRO do not have small business contracting goals or programs.

How the National Security Agency is Different from Other Intelligence Agencies

The National Security Agency has proved to be the most aggressive Intelligence Agency in developing programs to meet contracting goals, although the agency still has its own style of contracting and buying patterns. The NSA faces unique technical demands and its research and development focus coupled with agency size and increasing flow of raw intelligence, offers excellent contracting opportunity for small business contractors.

By: John M. Stout

The Art of Finding Customers For Your Business

Posted by admin on December 15, 2011 at 11:31 pm in Business
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The US Small Business Administration has stated that most new business owners frequently ignore prospective clients in their own neighborhoods. These new business owners concentrate on costly marketing techniques more fitting for big companies with matching advertising budgets. Let us take a closer look at this dilemma by discussing simple ways to get clients for a new home based business without using pricey advertising methods.

1. Check out social networking sites such as LinkedIn and Facebook. You should also do searches on Yahoo Groups, and visit Google and use their “groups” search function. Email or call members of groups you are already affiliated with, whether they are on- or offline. Check if there is an established group where you can meet with fellow business owners to swap basic information.

2. Whether you host or attend an event, make a point of working the room. The whole point is developing leads, or skills to help you. Collect business cards, flyers and other promotional materials from attendees, so you can keep them posted about upcoming events, but do not forget to drop off similar materials of your own. Do not just collect business cards; take time to make personal interaction.

3. Be willing to cooperate and share information with your competitors. Competition tends to produce suspicions that if you give away your information, people will use it and cause you to lose income or status. You will make money once you provide good customer service, have a good quality product or service, and genuinely care about the business you are in.

4. Promotional items are great advertising tools that can help your business reach out to the target consumers and invite them to your brand. Make sure the promotional gifts you use are of a high quality, and that they are relevant to the product you sell, so that customers are easily reminded of your company. Remember, they promote the company because your logo is printed on them.

5. Converse with people you know: associates, relatives, neighbors; hit the pavement, spread the word to everybody you know, particularly those who like your business and the products you have to offer, as an valuable means of generating business. Even a simple walk around your neighborhood is a great way to meet people in an informal setting and allows you to sell your product without really selling it.

6. Remember to offer value. You should offer your business contacts a way to help them, if you want them to help you. Give them contacts and resources and keep the relationship reciprocal. Make sure to follow through on your promises; if you offer to send something, like an article or referral, do so within a week of meeting. Refer your contacts: for example, if one of them is building a website, offer up contact information for a great graphic designer you know.

If you are a salesperson, recruiter, marketer or business owner, you can use an online business directory for your networking efforts. Jigsaw, found at www.GetPastTheGateKeepers.com, offers you more than 10 million business contacts, complete with full name, title, postal and email addresses and telephone numbers. It is a wonderful networking tool, and an effective way to gather and maintain information about your contacts.

By: Kent Levi

Small Business Loans For Women

Posted by admin on December 14, 2011 at 5:50 pm in Finance
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The Small Business Administration states that business loans for women are on the rise, and will continue to be needed on an increasing basis in coming years. Business loans for women are more popular than ever due to a variety of factors.

1. Women are taking the initiative needed to become business owners and are opening new businesses.

According to the most recent data on businesses, available from the U.S. Department of Commerce, Bureau of the Census, there were 5.4 million women-owned businesses in the United States in 1997. The Bureau of the Census also stated that the number of women-owned firms grew almost three times as fast as all firms between 1992 and 1997. They have reported that the number of women-owned firms increased by 16 percent in this five-year period, compared to a six percent increase for United States firms in general. The 1997 Economic Census states that women-owned firms made up 26 percent of the nation’s 20.8 million nonfarm businesses, employed seven percent of the 103 million workers, and generated four percent of the $18.6 trillion in receipts. The National Foundation for Women Business Owners states that the current estimated growth rate in the number of women-owned firms is nearly twice that of all firms, and this increase is a trend that is expected to increase even more in coming years. The anticipated increase in women-owned firms, therefore, brings about a tremendous need for business loans for women.

2. The past decade has shown a boom in the home-based business arena.

The increase in home-based businesses popping up nationwide is due very much to the idea that many mothers are starting businesses in order to choose a work-at-home lifestyle to bring income into the home, and at the same time, raise their children at home rather than placing them in daycare. While these home-based business are operated in a nontraditional work environment, in perhaps a nontraditional style of operation, they are nonetheless the same as other businesses in the style of carrying inventory, making purchases for the business, marketing the business, and creating a web presence. Business loans for women are crucial for small businesses such as these. Many have proven to be just as successful or even more successful than traditional businesses and businesses owned by men.

3. Women often purchase existing businesses.

Nearly no explanation is needed to stress the need for business loans for women in this area. Purchasing a business requires money, most often obtained through business loans for women or through another type of loan. Because more and more women are leaving the work place and carefully weighing all factors of owning a business, purchasing an existing business is a wonderful option for those that don’t want the risk involved in actually starting a business. By purchasing an existing business, it allows the potential new owner the opportunity to carefully examine the existing business regarding many things, including its profitability, gross sales, and market position. A business that rates high in all three areas is a good business investment for a new potential business owner, especially a women with past business experience. Business loans for women can offer a new, potential business owner the opportunity needed to operate a successful business.

4. With more women in business for themselves, business loans for women are needed to offer women capital crucial for a business to succeed.

Regardless of whether the business is home-based or more traditional in nature, and whether it’s a start-up business or was a purchased, existing business, capital is needed for a business to succeed, and to start, business loans for women are of great assistance. Business loans for women offer women a way of starting a new business with capital. Business loans for women can also assist women in increasing sales for an existing business, as well as marketing the business or expanding a business.

5. Women tend to choose to operate businesses in the services or retail trade industries.

According to the U.S. Census Bureau, more than seven out of every 10 women-owned businesses and firms are operated in the services or retail trade industries. Considering the nature of these two types of businesses, one can easily see why the need for business loans for women is on the rise. In order for a woman to successfully operate a retail trade business, for example, inventory is needed. While drop shipping can sometimes be an option, especially for an at-home retail business operated through an online store, more realistically speaking, inventory needs to be purchased. Business loans for women offer women the option of purchasing inventory to be sold in a retail business. Likewise, a service-related business normally operates with the use of equipment, and is often specialized equipment for that specific type of business. The availability of business loans for women offers women the opportunity to purchase equipment and supplies needed to operate and succeed in running a service-related business.

Business loans for women are increasingly important for female business owners. However, careful consideration should be taken before securing a business loan to make sure that the loan is truly needed for the business to expand and succeed, and to make sure that the loan payments will easily fit into the business’ budget.

By: Rebecca Hubbard Game

Small Business Lenders

Posted by admin on December 13, 2011 at 9:44 pm in Business
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Small Business Lenders are certified by the U.S. Small Business Administration to provide guaranteed funding to small business owners. Due to the diversity of applicants and the different business types, the SBA partners with their lending partners to make it easier for small businesses to obtain funding for new start-ups. Their involvement has allowed small business owners to obtain loans for a longer term and thus reduce the monthly repayments incurred. This provides businesses with a longer period of time to mature and stabilize without having to bear the heavy burden of a large loan repayment amount.

With this, the SBA has appointed a list of a few thousand lending partners in every state to extend this facility to the general public. Of course, borrowers are still required to submit full-fledge loan application proposals to the lender with the difference being that the SBA is the guarantor for such loans. This typically means that if the borrower defaults than the risk of non-repayment will fall upon the SBA, as they will then be responsible for repaying the loan.

Additionally, the criteria set forth for small business loans make 90% of all businesses qualified applicants for these loans. Apart from that, businesses are not burdened with balloon payments and high interest rates, which would otherwise be offered by any other commercial lender. Furthermore, fixed rate loans and variable loans are available to business owners. Therefore, business owners have more options in deciding the type of loan that would be suited for their business.

The purposes of acquiring a small business loan are varied according to the situation of the business. Small business owners may obtain loans to purchase real estate for business expansion purposes, to provide cash flow to support a large project, to lease machinery to operate a business, to utilize as working capital or to purchase inventory. Whatever the reason may be, business loans are evaluated an approved by these micro lenders after thorough evaluation of the business background, viability and purpose. The only difference is that through the support of the SBA, they are more willing to give out loans, as their risk is minimal with repayments guaranteed by a government agency.

By: Matt Bacak

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