Business Loans Pt. 2 -- SBA

The government is the best way to get your small business going most likely, as the Small Business Associaton (view their loan program website here) helps to fund a large majority of needed cash flow by potential business owners.

The SBA can be really helpful for business owners who may not be able to obtain the right amount of capital (or any capital) by conventional means. As the SBA website points out, the proceeds can be used for "most sound business purposes including working capital, machinery and equipment, furniture and fixtures, land and building (including purchase, renovation and new construction), leasehold improvements, and debt refinancing (under special conditions)." The SBA doesn't neccisarily offer the loans themselves, but rather enforces the loan through various affiliated banks.

They offer several loan programs including:

• Certified Development Company (504 program)
• Long term financing for businesses who need to aquire what the website calls "brick and mortar" capital, or things like machinery, buildings, real estate, or other ground level property needed to start the initial business.
• www.sba.gov/financing/sbaloan/cdc504.htm
  
• Microloan - a 7(m) program
• Short term loans which are used for aquiring small amounts of capital (the loan only maxes out at $35,000) for random goods you might need to either start up a business or expand it.
• www.sba.gov/financing/sbaloan/microloans.htm
  
• Loan prequalification
• Helps businesses by looking over their credit and credit applications and offering helpful insight and suggestions before they actually go and apply to a creditor. Helps to strengthen the application and increase the liklihood of getting the loan.
• www.sba.gov/financing/sbaloan/prequalification.htm

Obviously the loan is a tough and sore subject for potential business (and in my case bar) owners. However, obtaining optimum rates and the rights amount of capital can be key to whether or not the bar succeeds. Although I planned on keeping this to two parts, I think I'd like to go into business investing, and the choice of aquiring investors rather than loans from a bank to finance a project. Look for that in the next post.