Small Business Administration (SBA) Programs

Satisfactory Essays
As larger franchise continue to grow and take over the market place small businesses find them selves falling behind financially. With recession and the hard times it has created since 2008 small business continue to struggle to thrive and grow. Throughout this struggle the Small Business Administration (SBA) Loans programs have come up with a way to help the small businesses stay afloat. They help small business get access to financial assistant programs that have been create to help meet their needs including, debt, company growth, general company needs and capital. The SBA does not personally give the loans to the small businesses, but it helps give regulation on how the small businesses can receive loans whether it be through, micro lenders, investors or community organizations. Four beneficial programs that exist to help businesses are: Section 7(a) Loan Guaranty Program, Certified Development Program Company (CDC) 504 Loan Program, Small Business Investment Company (SBIC) and Micro-Loan Program. These programs provide and alteration to policy to help close the gap during economic disruptions. Understanding these programs, how they work and if they are efficient are key to deciding if this is helping or doing nothing for the small business industries.
The four SBA programs give small businesses and opportunity to get financial help through loans when usually they would be denied. Because of the economic conditions it makes it harder for business to maintain their debt and continue to grow and keep everything the same as before the economic shock. One program is the Section 7(a) Loan Guaranty this is a loan program that can be used on general business, fixed assets and working capital. It is a large loan given by a bank or lender. Conditions for this loan are set by purpose by the lender and collateral of the company is used, personal can be used as well (i.e. the owners home). The CDC/504 Program also provides loans to small businesses that are unable to get financial assistance from private lenders. Although it does differ from 7(a) Loans in two ways, “The 504 loans can only be used for fixed assets (i.e., land and buildings) and have fixed interest rates (under the 7(a) program, rate may be fixed or variable” (Urban Institute 3). In addition, they can receive funding from the CDC/504 through community organizations.
The Micro Loan program provides small businesses and some community organizations with small loans that can be used for start up or growth.
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