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Federal Resources to Encourage Business Expansion.

Federal – Small Business Administration

The Small Business Administration has two primary loan guaranty programs available to
businesses. 1) 7(a) Loan Guaranty Program; and 2) SBA 504 Loan Program.

The 7(a) Loan Guaranty Program is the SBA’s primary loan program. The SBA reduces
risk to lenders by guaranteeing major portions of loans made to small businesses. This
enables the lenders to provide financing to small businesses when funding is otherwise
unavailable on reasonable terms.Image

When a small business applies to a lending institution for a loan, the lender reviews the application and decides if it merits a loan on its own or if it requires additional support in the form of an SBA guaranty. SBA backing on the loan is then requested by the lender. In guaranteeing the loan, the SBA assures the lender that, in the event the borrower does not repay the loan, the government will reimburse the
lending institution for a portion of its loss.

The SBA 504 loan program provides long-term, fixed-rate, subordinate mortgage
financing for acquisition and/or renovation of capital assets including land, buildings and
equipment. (Reference Materials, SBA Publication, 2007) 

 

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