Who says you need money to start a business? Well, you may need some funds to begin, but it doesn’t necessarily have to be yours. In the U.S. the Small Business Administration (SBA) provides a few loan options for entrepreneurs to tap into if you need it and qualify.
It’s important to understand SBA’s role – the agency doesn’t lend the money directly to entrepreneurs to start or grow a business, but sets the guidelines for loans that made by its partners (lenders, community development organizations and micro-lending institutions).
SBA guarantees that these loans will be repaid, which eliminates some of the risks to the lending partners. Below are their top three.
How to Start a Business with No Money and the SBA Loan Programs Designed to Help You
7(a) Loan Program – SBA’s most common loan program, includes financial help for businesses with special requirements. The key factors of eligibility are based on what the business does to receive its income, the character of its ownership and where the business operates. Some basic uses of the loan proceeds include:
- To establish a new business or assist in the acquisition, operation or expansion of an existing business
- To refinance existing business debt, under certain conditions
Certified Development Company (CDC)/504 Loan Program – provides financing for major fixed assets such as equipment or real estate. Some of the eligibility requirements include:
- Operate as a for-profit company
- Do business (or propose to) in the United States or its possessions
- Has a tangible net worth less than $15 million and an average net income less than $5.0 million after taxes for the preceding two years
- Loans cannot be made to businesses engaged in speculation or investment in rental real estate
SBA’s Microloan Program – provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000. Generally, intermediaries require some type of collateral as well as the personal guarantee of the business owner.
From starting up or expanding your business to recovering from disasters, SBA loan programs are available to help your business succeed. You can explore various types of loans that may be available to you, including disaster recovery and even exporting!