Proper financing is one of the most integral parts of starting your own business. At Kaufman & Forman, P.C., we know how difficult it can be to secure a loan for your new start-up. Fortunately, there are a number of resources available through the U.S. Small Business Administration, such as the 7(a) program.
According to the SBA, in order to qualify for a 7(a) loan, your business must be small under the administration’s standards. Further, the following must be true:
- Your business is for-profit.
- You have a reasonable amount of equity invested.
- You can use other financial means such as your own assets.
- You will do business in the U.S. or its possessions.
- You will use the loan for business.
- You do not have any outstanding debt with the U.S. government.
One of the benefits of these loans is that they are not granted to individuals, but rather the business. Therefore, the SBA will use the business’ credentials and not yours. Additionally, there is a relatively quick turnaround time on these loans. Under SBAExpress, a business owner may receive a response on the application within 36 hours.
There is also considerable flexibility under the 7(a) program. The SBA points out that borrowers may be able to negotiate an interest rate, which can either be fixed or variable. There are also revolving lines of credit available, and certain loans for less than $25,000 may not require any collateral.
Aside from the 7(a) program, there are a number of other financing opportunities available for entrepreneurs. It is wise to work with a professional to understand which option is best for your financial future. For more information on this topic, please visit our page regarding help for entrepreneurs.