In the Virginia District, which excludes the Virginia counties around Washington, SBA approved 749 loans for a total of $363,332,500 in fiscal year 2018.  How many small businesses might not have been able to expand their businesses, pay off debt, buy new real estate for their businesses etc. if the SBA guarantee did not exist?  Nobody knows, but I can guarantee you that it is a big number.  A bank might receive a request for a loan that they would be inclined to turn down, but if it can get a 75% guarantee from the SBA it might make the loan.  That is the SBA’s mission – to give lenders the incentive to make more small business loans.

SBA loans can be used for any normal day-to-day operating expense such as what you would expect to find on a balance sheet or P&L.  They cannot be used to buy investment properties.  A business must be a for-profit business.  Under the SBA 7(a) program – the major loan guarantee program, there are also special programs for certain industries.  For example for contractors there is the CapLines program which can be used for things like short-term working capital loans and to finance construction costs.  There are several different programs to help finance international trade and exports.  There is another program called the 504 program which is used for fixed asset purchases such as real estate and machinery purchases.  It is a two-part program with the opportunity for a business owner to finance up to 90% of a project.

SBA also provides Resource Partners – SCORE, Small Business Development Centers and Women’s Business Centers that provide free mentoring and low-cost education services to small business owners.  For the near-term foreseeable future we are going to be operating in a very low interest rate environment.  On all SBA loans longer than seven years and over $50,000, the maximum interest rate that can be charged is 2 ¾% over prime.  Opportunities abound.

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