Small Business Administration – Loan programs

From:Fred M.

I am very much interested in opening a computer service company in San Antonio, TX. I understand that the SBA (Small Business Administration) has a program called 8A. I am scheduled to go to a briefing next week with them. Could you give me any insight about this program? Also is there someone you may know that can assist me in filling out paperwork required. When I speak of assistance, I mean helping me understand what information, I need to provide.

#AskRecy response:

The SBA’s 8(a) BD Program, was named for a section of the Small Business Act, and was generally known as a business development initiative that helped socially and economically disadvantaged American citizens to gain access to the economic mainstream. As part of the business development program for the 8(a) firms, SBA helps small disadvantage businesses compete for Federal contracts. As required by law, the SBA must function as an intermediary for 8(a) contracts, but can delegate its authority through special agreements.

I do not believe the program currently exists. The different SBA loan programs that are now listed on their website are as follows:
7(a) Loan Programs
Businesses with special requirements (such as those in exports or those operational in rural areas) are covered under this program. This is considered to be the most flexible choice, and also the most suitable one if you have a start-up in mind. The different 7(a) loan programs are:

Special Purpose Loans: offers 7(a) loans to those businesses which have been affected by NAFTA, to assist Employee Stock Ownership plans and so on.

Export Loan Programs: fewer than 70 percent of the total export businesses in the U.S. have a maximum employee count of 20. The various export loan programs further expand their export activities.

Rural Business Loans: this program is aimed at providing a simpler and more streamlined 7(a) process to acquire loans for businesses operating in the rural areas.

Microloan Program
If you are in need of small, short-term loans, then the Microloan program is just the right deal for you. You can use Microloan funds for: Purchasing supplies, inventory,machinery or furniture. The Microloan fund cannot be used for the purchase of real estate or for the paying off of any existing debts. The maximum Microloan amount is $50,000.

CDC/504 Loan Program
Spanning long-term financial planning, the CDC/504 Programs provide a platform for the development of the community as a whole. The loan sanctioned under this program provides small businesses with fixed-rate financing. These finances are then utilized to acquire assets which are mainly aimed at modernization, such as commercial mortgages, street-improvement utilities, and so on. Your small business should be operated with a profit-seeking intention, but should not be engaged in the investment of real estate.

Loans for Women-Owned Business

Being a women entrepreneur, the world can be yours for the taking if you plan the expansion of your business correctly. It is advised that you visit the SBA Office for Women’s Business Ownership for further information related to the different types of grants and loans available to women and counseling on the same. The National Women’s Business Council is another federal advisory body which addresses various economic issues and offers advice to female business owners.

The first step in seeking certification is to contact the local SBA district office serving your area. An SBA representative can answer general questions over the telephone. Some district offices may also have orientation workshops to provide additional information regarding the eligibility requirements and to review various SBA forms.

The basic requirements for an SBA loan is the applicant firm (a) must be a small business; (b) must be unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States; and (c) must demonstrate potential for success.

SBA defines a small business as one that is independently owned and operated and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding 12-months or on sales volume averaged over a three-year period. However, you should contact your local SBA office for the latest and up to date requirements.

SBA defines socially disadvantaged individuals as those who have been subjected to racial or ethnic prejudice or cultural bias because of their identities as members of groups without regard to their individual qualities. The social disadvantage must stem from circumstances beyond their control. In the absence of evidence to the contrary, the following individuals are presumed to be socially disadvantaged: Black Americans; Hispanic Americans; Native Americans (American Indians, and other minorities. Again, contact the local SBA for complete guidelines.

The SBA have a minimum length of time in business requirement and the applicant firm must have been operational for at least two full years, however, the firm may obtain a waiver of the two years in certain situations.

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