Need Money to Start or Grow your Business? SBA can Help

By David Hall

Everybody knows that to start or grow any business you need money, greenbacks, dough, moolah – whatever you want to call it – be it cold, hard cash or intangible yet equally effective credit.

What’s not always clear, however, is where to get it, and that’s the real challenge.  Most new businesses, and even some established ones, have to resort to creative methods of raising needed capital, methods that may work in the short run but be inadvisable for the long haul. Mortgaging your house, using credit cards and cadging personal loans from friends and family are some of the most widely used methods.

Many people also seem to mistakenly believe the government has tons of cash to give out in grants for businesses to start or grow.  Not so. We dispelled that myth on a previous post.

The government, however, does have numerous programs to help business start, grow and succeed. The subject is too broad to tackle on a single post, so, let’s focus on one of the most recent government initiatives, one designed to help those who need it the most: businesses in underserved communities.

Enter SBA Advantage

The U.S. Small Business Administration is the number one federal agency in charge of helping all US small businesses, in particular those that  historically have encountered more challenges, be they social or economic, in their pursuit of success. Women, ethnic minorities, people in rural areas or inner cities are some of the groups considered “underserved” for this purpose.  Government statistics show that these groups are among the hardest hit by the recent recession.

The SBA recently launched a two-pronged program to help businesses in underserved communities get better access to much needed capital: Community Advantage and Small Loan Advantage.

Community Advantage Program

So you’re an entrepreneur wanting to start your own business or a business owner who wants to expand the business. What does Community Advantage do for you? Here are the high points:

• CA will help you obtain a loan up to $250,000 by pledging to a lender that SBA will guarantee repayment of 85 percent of a loan up to $150,000, and 75 percent of the loan amount on loans larger than $150,000
• Most CA loans will be approved by SBA within 5 to 10 days
• Paperwork is substantially reduced , especially for the borrower, who fills out a two-page application

One very important feature of the program is that loans are delivered through non-profit Community Lenders (thus the name of the program) with experience making loans in economically-challenged markets and matching them with crucial technical and management assistance to help the business – and the loan – succeed.

SBA is committed to the success of this program and has approached more than 200 potential community lenders, over 25 percent of which have shown interest in participating.

Small Loan Advantage Program

SLA is essentially similar to Community Advantage in that the features are nearly the same, namely a maximum loan amount of $250,000, similar guaranties of 75 percent to 85 percent depending on the amount, reduced paperwork and streamlined application process.

The difference is that SLA loans are delivered through an extensive network of commercial lenders, mostly banks that have extensive experience in working with SBA and can approve loans in a matter of minutes.  Currently the program is open to more than 630 lenders nationwide.

Using both commercial lenders and community lenders to deliver these loans ensures small businesses nationwide, particularly in underserved markets, expanded access to the capital they need to start, grow, succeed and create jobs.

Entrepreneurs and small business owners interested in more information about these programs, as well as lenders interested in participating are encouraged to contact the closest SBA district office (http://www.sba.gov/about-offices-list/2) or visit http://www.sba.gov/content/advantage-loan-initiatives.