Looking for a loan from the Small Business Administration? Read this from Entrepreneur:
Type “SBA loan” into Google, and you’ll find hundreds of websites purporting to facilitate loans from the SBA. The fact is, the SBA doesn’t make loans. Visit the SBA’s website, and it clearly states that the organization is not in the business of making loans.
Instead of direct lending, the SBA provides credit guarantees to banks and other institutional lenders who provide loans to business owners. The credit guarantee enables banks to make loans that are somewhat more risky than they would otherwise make. (Read this column for more details on SBA financing.)
In the past year, there have been many new developments regarding SBA financing including the proposed elimination of the Microloan program for loans under $35,000. If you’re seeking a small loan, you should be aware of these developments by reading about this topic before approaching your banker to request a loan application. Typically, the SBA guarantee cannot by used by startup businesses without three years of sales history.
If you were planning get a loan from the SBA, unfortunately, you’re out of luck. But there are other options, and you really didn’t want to go with hat in hand to Uncle Sam, did you?
via Linda Riley.
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