How the Small Business Administration Works
A Home Business Article Contributed by G. Uma Bennett
How the Small Business Administration Works
The Small Business Administration works with approved local lenders. These lenders review your application and can either approve your application themselves or request a Small Business Administration guaranty. This guaranty means that the government will pay the loan if you cannot. A Small Business Administration guaranty is usually sought by a lender who feels your business proposal is a little too risky.
The Small Business Administration reviews the guaranty applications received from the primary lenders to check whether the loan proposal meets its own criteria. Lenders are designated as 'Certified' or 'Preferred' according to their performance record and get speedier approvals.
Your Small Business Administration Proposal
The Small Business Administration looks for several things in your proposal. Starting with an understanding your business idea and information about the persons behind it. The summary of your Small Business Administration loan request must state the amount and purpose of the money requested. Give a detailed description of your business, earnings, assets, current financial position and Who controls the business?
Other information; the number of employees and how long has the business been established? How well you know your market and your competition. Be prepared to give background management and financial information on the company and personnel.
When do You Need a Small Business Administration Loan?
Small Business Administration loans become necessary when you are a new entrepreneur with no past experience in business and the risks associated with your project are considered high by banks. Small Business Administration loans are usually made for large purchases of building construction, machinery, equipment or furniture. You can also apply for a Small Business Administration loan to finance inventory and receivables, operating expenses or executing contracts.
When you have a good business idea but cannot bring in your own funds, an Small Business Administration approved private investment company will make capital available to entrepreneurs, through investment or loans.
Hi Tech and the Small Business Administration
If your business is involved with technology innovation research, the Small Business Innovation Research program, may be able to help you. The Small Business Administration grant is for small businesses that need to support research/research and development that has the potential of commercialization. The Small Business Administration provides these grants to small business is to support advanced technology research.
Areas that are considered for funding include cancer research, biomedical and bio-engineering projects. The National Science Foundation is responsible for the operation of this Small Business Administration program and requires a detailed business proposal in a standard format.
How to Pre-Qualify with the Small Business Administration
The Prequalification Loan program has non-profit organizations whose role is to assist you to develop a sound application package to secure a Small Business Administration loan. Created especially for the individuals with low income, disabilities, new and emerging businesses, veterans, exporters, rural and specialized industries. These organizations work with you to ensure that your business plan has all the necessary requirements.
They will also make sure your application is eligible and is credit worthy. Once they are satisfied with your applications' chance for approval, they forward it to the Small Business Administration for processing. There is no fee required.
