SBA Loans

SBA Loans

Revolving Line of Credit Program. Under this plan, which was started on a pilot basis in January of 1971, the SBA Loans may guarantee a line of credit to small construction contractors, or manufacturing or service firms, who provide a specific product or service under an assignable contract. The firm must have been in operation for at least a year and must be unable to obtain a bank line of credit without the SBA guarantee. The amount guaranteed may be up to $250,000 as the SBA share, if made under the bank participation loan program, or up to $100,000 if made under the Economic Opportunity Loan program. The bank may charge its normal rate of interest without regard to the SBA’s published maximum guarantee rate. The maturity may be up to one year, or 18 months for larger contracts.

Mini Women’s Program. This direct loan program has a maximum loan ceiling of $20,000. This is the newest of the SBA programs designed to assist women in the small business community. All SBA loan officers have been asked to give women loan applications special attention, and the SBA has set itself the goal of substantially increasing loans to women, especially bank guaranteed business loans. Some district offices participating in this program fund these loans in as little as five to six weeks after application. Check with the SBA district office nearest you to see if they are participants.

Solar Energy and Energy Conservation Loan Program. Small Business energy loans are available to start, continue or expand small businesses that are developing, manufacturing, selling, installing or servicing specific solar energy and energy conservation measures. Loans may also be made for engineering, architectural, consulting or other professional services connected with these specific energy measures.

Energy loans are not available to firms for installing or undertaking energy conservation measures of their own plants or construction, for buildings, machinery, equipment, future, fixtures, facilities, supplies, materials, or working capital. Generally, energy loan funds cannot be used for research and development. Under special circumstances, however, up to 30 percent of a loan may be approved for such purposes.

THE COMING OF THE BANKS

The SBA recognizes that the needs of small businesses are best served through the combined efforts of the banks and the SBA. While the SBA direct loans have been limited in recent years, the SBA has reached new heights in the number of loans and the amount of assistance extended through its participation with the nation’s commercial banks under the guarantee loan program.

SBA BANK GUARANTEED LOANS

In 1963, a Loan Guarantee Plan was established at the SBA. Under the Loan Guarantee Plan, the bank and the SBA enter into a written guarantee agreement. The loan is disbursed and serviced by the bank, with the SBA guaranteeing repayment of up to 90 percent of the borrowed amount. The SBA’s guarantee of loans under this program may currently reach a high of $2,000,000.

The participation plan benefits the banks, the small businesses to which the loans are made, the local community and state and the economy of our nation as a whole.

Participating banks benefit because these loans enable them to broaden their lending activities, maintain desired liquidity of assets, provide better service to their customers and receive a fair return on their money and reasonable compensation for administering the loans, while also limiting their risk.

Small businesses benefit because they obtain needed credit not otherwise available on reasonable terms.

State and local communities gain through thriving small businesses which contribute to an expanding economy and resulting community prosperity.

The nation benefits because ready access to needed financing insures a healthy and growing small business population.