The Small Business Administration (SBA) is a US government agency that helps people start, build and develop small business. You probably wondering, “What could possibly be exciting about that?” Well, not so quickly. There is actually most of the businesses that are interesting in this government organization. Here are the five facts about the SBA loans that just might shock you.
- The SBA Does Not Loan Money
Most businesses have heard the term “SBA loan,” though many might not understand that the SBA does not make loans directly to small businesses. As a substitute, the SBA offers a guarantee to, and sets guidelines for, SBA loans truly made through traditional banks, credit unions, community development organizations and micro lenders. More importantly, the SBA guarantee allows lenders to loan to small businesses they would not have been able to help previously.
- Zero Cost To Taxpayers
Government spending is a business terminology that you listen again and again, particularly in an election year. However, don’t bring up the SBA when you talk about spending cuts, due to the fact that the SBA funds all of its own operations with the guarantee fee it collects from the borrowers. SBA loans over $150,000 additionally carry a guarantee fee that is typically 2-3% of the loan amount. What this indicates is that the macroeconomic advantage that the country gets from the 45,000 small businesses that yearly get SBA loan at low-rate annually adds to the US overall economy without costing a dime to the taxpayers.
- Fueling the US Economy
SBA loans help small businesses and the overall US economy develop. The statistics shows that back in 2014, small businesses created over 2 million new jobs, while small businesses employ more than 50% of the state’s entire workforce. SBA loans every year also amount to more than $20 billion borrowed by the small businesses that might not have in any other case secured low-rate funding.
- More Than Loans
However in case you just consider “business loans” when you hear “SBA,” you’re partially right. At present, the SBA has a variety of services to help the American businesses be successful. The SBA programs encompass supporting small businesses get government contracts and minority supporting programs.
Moreover, the SBA’s Small Business Development Centers (SBDC) provide assistance to small business to grow. Small business owners can contact their nearby center with commercial questions or problems and get expert answers and solutions.
- Lifeline For Small Businesses
Small businesses have to start their financing search with an SBA loan. SBA loans are traditionally the “gold standard” for businesses; any business that can get one should typically take it. SBA loans provide longest terms, lowest rates and lowest payments available on the market. These loan proceeds can then be used for different functions, such as advertising, working capital, hiring staff, equipment purchases and the buying or refinancing of commercial property, the purchase of a business, the buyout of a associate and different uses.
One mainly famous use for SBA loans in these days is the refinancing of existing high-cost loans. That use lowers typical monthly debt payments and improves business cash flow.