Government Grants and Loans

small business loans

Have you been furiously searching the internet for a guide to government grants and loans for small businesses? Does every search lead you to the same “free money”? If you are a small business owner looking for government grants and loans, you’ve probably seen the hype.  Free government loans, free government grants just click here!  Internet popup ads, websites and Facebook ads all seem to be offering grant money to small business owners starting or expanding their business.  Sound too good to be true? Of course it is, what they say is true, nothing in life is free!

You want to know the real truth?  A good small business guide to government grants and loans will outright tell you; the truth is that federal and state governments do not provide grants for starting and expanding small businesses.   The U.S. government however, does offer a number of low-interest loans and venture capital financing programs to help entrepreneurs like you start and grow their businesses.

Some business grants are available through state and local programs, nonprofit organizations and other groups.  It varies state by state.  While some states may provide grants for expanding child care centers and creating energy efficient technology; others reward businesses developing marketing campaigns for tourism.  These grants are usually not large enough to cover all expenses, and may require your business to match funds or obtain other forms of financing such as a loan. The amount of the grant money available varies with each business and each grantor

This small business guide to government grants and loans will provides an explanation of a handful of federal and state loan, grant and venture capital financing programs available for your small business.

Small business guide to Government grants and loans – Small Business Administration Loans
The mission of the U.S. Small Business Administration (SBA) is to help small business owners to start and expand their business.  They achieve this goal by helping businesses get loans through third party lenders. The SBA is not in the business of giving loans, just making the process easier.  SBA can help facilitate a loan for you with a third party lender, guarantee a bond, or help you find venture capital.  SBA provides a number of financial assistance programs for small businesses that have been specifically designed to meet key financing needs, including debt financing, surety bonds, and equity financing. 

SBA offers a number of low-interest loan programs for new and expanding small businesses. SBA is not a lender, and does not grant loans directly to businesses. Rather, SBA is a guarantor of loans made by privately owned banks.

Some interesting loan programs for starting or expanding your business include:

·       Basic 7(a) Loan Program - Gives 7(a) loans to eligible borrowers for starting, acquiring and expanding a small business. This type of loan is the most basic and the most used within SBA's business loan programs.

·       Certified Development Company (CDC) 504 Loan Program - Provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.

·       Microloan Program - Offers very small loans to start-up, newly established or growing small business concerns. SBA makes funds available to nonprofit community based lenders which, in turn, make loans to eligible borrowers in amounts up to a maximum of $50,000.

Small business guide to government grants and loans – USDA Loans
If you operate a farm or business in a rural area, an USDA loan may be your answer.  The Business and Industry Guaranteed Loan Program (B&I) helps create jobs and stimulates rural economies by providing financial backing for businesses. This program provides guarantees up to 80 percent of a USDA loan made by a commercial lender. USDA Loan proceeds may be used for working capital, machinery and equipment, buildings and real estate, and certain types of debt refinancing. The primary purpose of USDA Loans is to create and maintain employment and improve the economic climate in rural communities. This is achieved by expanding the lending capability of private lenders in rural areas and helping them make and service quality loans that provide lasting community benefits.

Small business guide to government grants and loans – Venture Capital
The SBA also has its hands in the world of venture capital.  Small Business Investment Companies (SBICs) and Specialized Small Business Investment Companies (SSBICs) target entrepreneurs who have been denied the opportunity to own a business because of a social or economic disadvantage, are licensed by the Small Business Administration (SBA). These investment companies have their own private capital of several million dollars and may borrow additional funds from an SBA-sponsored trust at favorable rates. SBICs tend to be more risk tolerant than banks or regular venture funds, specialize in a particular industry, and target young companies that aren't ready for a traditional venture deal.

Not enough options for you?  Kabbage may be able to help you grow your business!  Kabbage understands the challenges of funding your business.  Growing a business is difficult, getting working capital to grow your business shouldn’t be. Kabbage wants to be your straight-forward, friendly source for funding.