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The U.S. government extends so much assistance to small businesses because it is aware of how important small-scale businesses are for the long-term strength of the country. Small businesses contribute to employment and thus, provide income to people. However, aside from creating jobs, small businesses play an essential role in economic recovery and global competitiveness.
The U.S. Small Business Administration (SBA) is a government agency whose main mission is to help entrepreneurs get loans easier so they can start or expand small businesses. The organization aims to increase the amount of capital that is available to business owners by minimizing the risks of financial difficulty from borrowing from banks and other private institutions. Nevertheless, while most SBA loan programs are available to all kinds of small business entrepreneurs, some are specifically available to groups such as veterans, women, and minorities.
In general, the U.S. Small Business Administration offers loans, grants, and technical support to those in need of help. Do note that there are guidelines you need to follow if you wish to qualify for an SBA loan. In addition, there are prerequisites you need to meet if you want to increase your chances of getting approved for the loan. Yes, applying for an SBA loan is easier compared to a bank loan, but instant approval is not guaranteed.
If you need funds right away, you might want to consider applying for a merchant cash advance (MCA) instead. An MCA is not a loan. It's somewhat like a lump sum payment to a business, with the funds deposited to the business' account quickly, provided that you would pay off the lender with an agreed-upon percentage of future revenues, as well as credit and debit card sales.
Now if an MCA is something you're wary of trying out, it would be best if you just stick to borrowing from banks or financial institutions.
In terms of loans, the SBA's major role is to "guarantee" loans made by private lenders. Generally, SBA loans guarantee results in lower interest rates and longer repayment terms than private loans without the guarantee. Here, the borrower and the private lender negotiate the terms and conditions of the loan, subject to SBA's policies on amount of loan, interest rate, and maturity. The Small Business Act Sec. 7(a) contains the SBA's guarantee programs for regular small businesses. The maximum amount of loan is two million dollars, of which the SBA guarantees $1.5 million.
The SBA provides technical support to those who want to start a business by providing grants to non-profit organizations such as the Small Business Development Centers (SBDCs), Small Business Training Network, and Service Corps of Retired Executives (SCORE). Because of the grants provided to these non-profit groups, entrepreneurs are able to get free advice (technical support) on all aspects of starting, managing, and expanding small businesses from the said groups.
Indeed, one of the biggest challenges of new and established entrepreneurs is finding enough financial resources to pursue their ventures. Today, however, there is no need for business owners to be worried sick of finding investment funds because the Small Business Administration is there to provide expanded assistance to anyone interested in starting or managing a small business. Try to learn more about it to see how it can benefit you further.
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