As a small business owner, one of the biggest hurdles to growth is securing financing. Fortunately, the government has several small business loan programs designed to help entrepreneurs start and expand their businesses.
In this beginner’s guide, we will explore the most popular government small business loan programs and what you need to know to qualify.
1. Small Business Administration (SBA) Loans
The SBA is a federal agency that provides support to small businesses in the form of resources, counseling, and access to financing. The most popular financing programs offered by the SBA are the 7(a) Loan Program and the 504 Loan Program.
The 7(a) Loan Program provides small businesses with loans up to $5 million with longer repayment terms, lower interest rates, and smaller down payments than traditional loans. To qualify for a 7(a) loan, your business must be for-profit and meet the SBA size standard, which varies by industry.
The 504 Loan Program provides small businesses with long-term financing for real estate and equipment purchases. The loans are made in partnership with Certified Development Companies (CDCs) and private-sector lenders. To qualify, your business must meet the SBA size standard and have a tangible net worth of less than $15 million and an average net income of $5 million or less for the previous two years.
2. USDA Business and Industry Loan Guarantee Program
The USDA Business and Industry (B&I) Loan Guarantee Program provides financing to rural small businesses to help create jobs and stimulate the economy. The loans can be used to purchase real estate and equipment, construct buildings, and finance working capital.
To qualify for a USDA B&I loan, your business must be located in a rural area, have 500 or fewer employees, and meet other eligibility requirements based on the specific loan program.
3. Export-Import Bank of the United States (EXIM) Loans
The EXIM Bank provides financing to help small businesses make export sales. The loans can be used to finance equipment purchases, inventory, and working capital.
To qualify for an EXIM loan, your business must have been in operation for at least one year, have a positive net worth, and be able to demonstrate the ability to repay the loan.
Conclusion
As a small business owner, financing can be a major hurdle to growth. Fortunately, the government has several small business loan programs designed to help entrepreneurs start and expand their businesses. Whether you’re looking for long-term financing for real estate and equipment purchases or short-term financing for working capital, there’s a government loan program that can help you grow your business. Be sure to do your research, read the eligibility requirements carefully, and work with a trusted partner to navigate the loan application process.
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