If you’re a small business owner, chances are you need stuff. Lots of stuff. From equipment and office space to supplies and furniture, getting over the initial hump of startup costs can be tricky.
Luckily, the SBA offers a variety of different loan options to help startup companies get the ball rolling.
Here’s how it works: the SBA doesn’t actually lend money to SMBs. Instead, they making lending less risky for private institutions by backing up a large portion of the loan amount. This means that while a bank or credit union might turn you down flat for a $100,000 loan, they may very well think twice when $70,000 of that amount is secured by the government. If you default, they still get most of their money.
The 7(a) loan program is the SBA’s most popular loan option. 7(a) loans are long-term — meaning you can take anywhere from 10 to 25 years to pay them back. They are also incredibly flexible. This means that you can pretty much spend the money on whatever you need that relates to your business: real estate, supplies, machinery, web design, marketing materials, you name it!
Within the 7(a) loan program, there are four different types of loans tailored to the needs of the borrower. To find out which 7(a) loan will help facilitate your small business opportunities, click here.
A microloan might be a great option for you if you don’t qualify for a larger 7(a) loan, and if you need to furnish an office space, buy equipment or stock a warehouse with needed supplies and products. The SBA works with nonprofit lenders to provide loans that average out to around $13,000.
Note that the payback period on microloans is relatively short, and that only certain expenses qualify. For example, you can’t use a microloan to pay off debts or pay rent on your office space.
What good is all of this financing if you don’t know how the heck to start a small business in the first place?
Most small business owners aren’t necessarily business experts – think about the owner of a dog grooming company, for example. He or she may be fierce when it comes to shampooing pooches and declawing cats, but may not have a clue as to how to design a killer squeeze page or implement email campaign sequences.
That’s where the SBA comes in.
Your local SBA office provides free information on small business opportunities, training, financial opportunities and government contracts. If you’re too busy running your business to visit the office in person, you can participate in online classes via the SCORE program, a nonprofit association made up of savvy SMB volunteers just waiting to mentor you. In addition to one-on-one counseling, SCORE provides free online training sessions, webinars, and peer to peer support.
Did you know that the government sets aside a certain amount of money each year for small business contracts? It’s strange to think about, but their is no bigger business than the Federal Government, and Uncle Sam wants you! And what better way to get in good with the government than through the SBA – a government agency!
Procurement Technical Assistance Centers were created by the SBA to help small business owners seize opportunities to work for the Fed by selling products or services at the local, state or federal government level.
Sign up for an appointment at your local PTAC to find out how your business can obtain a government contract (which, by the way, tend to be pretty lucrative). If your small business qualifies for special certifications that will increase your chances of landing a contract, the PTAC will help you identify and apply for them.
Once you’ve obtained all of your applicable certifications (woman-owned business, minority-owned business, etc.) the PTAC will take a look at the competition and assess your level of readiness. For example, if you own a marketing firm, the PTAC will take a look at who the government’s been using for their marketing (hey, even Uncle Sam needs SMO), and help you determine if you can compete with past winners.
If you’re ready to rock, the PTAC will help you navigate the sometimes confusing (ok, always confusing) government application process. If you’re not quite where you need to be in order to place a competitive bid, they’ll help you analyze your small business and make the necessary changes to get you ready for the big time.
Do I qualify?
If you’re simply starting with a laptop and a dream, you still may qualify for assistance from the SBA. While a fat government contract or a $4 million 7(a) loan may not be in the cards in the very beginning, that doesn’t mean you can’t benefit from the endless free resources offered at sba.gov.
If your credit is good and your idea is even better, you may even qualify for a loan through one of the many SBA lending programs. And if obtaining financing seems like a long shot, you can still take advantage of free one-on-one mentoring and workshops that will help you create small business opportunities for your startup. Before you know it, you’ll be invoicing Uncle Sam himself!
What has your experience been with your local SBA?
photo credits: scoreoc.org, dekalbchamber.org, www.vtsbdc.org,