SBA Working Capital Loan
SBA, which stands for Small Business Administration was founded in the year 1953. It was first an independent department of the government that aims to give aid, provide counseling and assistance and as well as protection of interest of small scale business enterprises.
The SBA believes that small business is part and parcel of the overall economical strength of the United States.
It is in this light that this agency also aims to maintain and aid in building the country’s economic future and compete with the worldwide market. While it is true that SBA has grown over the years and has undergone a lot of transformation, its founding mission remains as it is. That is, the SBA “helps Americans start, build, and grow businesses.” Because of its wide range networks of offices and as well as linkages with public and even private organizations and institutions, SBA caters and provides services not just to people in the United States but even far reaching to Puerto Rico, the U. S. Virgin Islands and Guam.
Most small businesses encounter problem in finances not just during the start-up phase but as well as in its current operations. Most of them cannot cover and maintain the costs attached to its daily run. Although, there may be a profit, still, most of the times, it is not sufficient. The revenues cannot independently and continuously provide for the operation costs of the business. And, this is where the SBA comes in.
In the case of the abovementioned circumstance, what a small business owner may need is a working capital loan. SBA’s Microloan Program may just be the right answer.
What is a Microloan Program? It is a program offered by SBA that aims to provide small and short-term loans to small businesses. Usually, microloan programs are used for working capitals and whatever it may entail like inventory, supplies and equipment, wages of employees and others that may apply. In this type of program, the funds cannot be used to settle accounts payables or to further purchase assets like real estate.
How is it done? What usually happens is that the SBA makes sure that funds become available to specially listed intermediary lenders. These lenders are usually the non-profit, community-based organization type. They make loans accessible to qualified borrowers. Moreover, these intermediary lenders are usually required and tasked to give business training as well as technical assistance to its borrowers. In effect, the borrowers may be required to comply to a training requirement before his or her loan application may be considered and granted.
How much may be loaned? The average is around $13,000. However, you may be loaned of up to a maximum of $35,000.
What are the terms to a Microloan program? The terms depend on the loaned amount, the use of the funds, requirements asked by the lender and also, the needs of the borrower. The maximum term may be allowed up to six years. The rate of interest depends on the discretion of the lender and the costs as designated by the U.S. Treasury.
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