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SBA Financing for Small Businesses

April 13, 2006

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Currently, there are three basic financing programs that remain available through the SBA: the Microloan program for small businesses loans under $35,000, the Section 7(a) loan guarantee program, and the Section 504 Community Development Corporation program. All SBA guaranteed loans are done via your local bank. The SBA does not loan directly.

The Microloan program is perhaps the most accessible to startup businesses. Microloan funds are SBA grants to approved, nonprofit organizations that accept loan applications and make loan decisions. To locate a Microloan source in your area go to this link.

The Section 7(a) loan guarantee program includes a variety of separate specialized programs. The popular "LowDoc" program, implemented in 1993 to increase the availability of small loans (under $150,000) to businesses by reducing the burdensome paperwork previously required, was terminated in 2005 so you must now resign yourself to preparing extensive documentation for an SBA loan guarantee.

The Section 504 program involves SBA participation in private, nonprofit companies (Certified Development Companies or "CDCs") established for the purpose of providing long-term, fixed-asset financing to small businesses.

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