Unsecured Loans

The U.S. small business administration (SBA) was created in 1953 as an independent agency to support and protect the interest of the small businesses. It offers various loan programs to help the small businesses, which are not able to secure loans through other channels. SBA acts as a guarantor (on behalf of the business in question) on the loan provided by all the lenders, such as, banks, Credit Unions, etc.) who wish to participate in the SBA loan programs.

The various lending programs available through SBA are:

Basic 7(a) Loan Guaranty: This loan is available to those small businesses, which are not eligible or have not been able to secure loans through normal lending channels. The loan under this program is available for a variety of business requirements, such as, working capital, furniture and fixtures, land and building (including purchase, renovation and new construction), leasehold improvements, and debt refinancing (under special conditions). The loan has to be repaid within 10 years for working capital loan and can be extended up to 25 years for fixed assets. These loans are always guaranteed for a certain portion of the loan amount by SBA. The lender and the SBA share the risk that a borrower will not be able to repay the loan amount.

Certified Development Company (CDC), a 504 Loan Program: This loan is meant for the small businesses who wish to acquire real estate or machinery for expansion or modernization. A 504 project usually includes a loan secured from a private-sector lender with a senior lien, a loan secured from a CDC (funded by a 100 percent SBA-guaranteed debenture) with a junior lien covering a maximum of 40 percent of the total cost, and a contribution of minimum 10 percent equity from the borrower. CDC is a nonprofit organization set up to contribute towards the economic development of its community.

Microloan, a 7(m) Loan Program: It’s a new program, which offers loan up to USD 35,000 to small businesses and not-for-profit child care centers for working capital or the purchase of inventory, supplies, furniture, etc. The loan cannot be used to pay off any existing debt or to purchase real estate. The loans are not guaranteed by SBA and are available in select locations in each state.
Disaster Recovery Loans: You may be eligible to get this loan if you are living in a declared disaster area or you are a victim of disaster, even if you don’t own a business.

In addition to this, there are few special purpose loans available for the following:
Export Working Capital
Export Express
International Trade Loans
CAIP Program
Employee Trusts
Pollution Control
CAPlines

For more information about sba business loans see SBA Business Loan.

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