By Sarah Chambers
The SBA is every entrepreneurs’ best friend. Or, at least, it should be. It is a shame that the agency does not receive more attention than it does. Founded in the 50’s by Congress and signed into existence by President Eisenhower, the SBA exists to give the American business owner the leg up they need. The agency does this through its “three C’s”, those being capital, contracting, and coaching. This means that the SBA makes sure that American entrepreneurs have access to the capital they need, can score federal and state contract work, and receive coaching from mentors that can provide them valuable insights.
In particular, the SBA focuses on providing loans to businesses that would not be able to access capital on ‘reasonable’ terms elsewhere. There are a number of programs for this. The most well known one is the 7(a) loan program. This is a self-sustaining loan program that gives entrepreneurs that otherwise wouldn’t get it a chance to access capital for just about whatever project they have in mind. In fact, the terms for these loans are very broad. Everything from investments in new real estate for the business to filling in cash flows are acceptable uses. However, we wanted to really dig into this and see just how unique of uses entrepreneurs have found for their SBA loans. After all, it is meant to help your business grow, however you think that goal be best accomplished.
Perhaps your business has fallen behind on inventory and you have a huge new order coming in from a client. You might even need to pay extra to have the order fulfilled on a rushed timeframe with your suppliers. Guess what? An SBA loan can be used for this purpose. If you don’t have the cash on hand but need it quick, you might have to get a loan in this situation. What’s more, the SBA even has a special type of loan tailored for situations on a short timeframe like this called the SBA Express Loan. You can receive a decision from the lender in as little as 36 hours with these loans and will receive the money in a much shorter amount of time.
These kinds of loans make sense in a lot of situations like this. Of course, the SBA sweetens the pot for both parties by guaranteeing part of the loan for the lender, thus ensuring that the lendee can receive more favorable terms.
While this might not be something you would normally think to get a loan for, the SBA allows funds they guarantee to be used for office renovations. This can be everything from updating the building itself to decking out the office with nice new furniture and decorations. This is probably not a situation that is as rushed as needing inventory to fill a last-minute order from an important buyer, but the regular SBA 7(a) loan program will work just fine for these sorts of needs.
In fact, the SBA lists just one of these success stories on their site. They discuss an entrepreneur in the Portland area that had spent several years working in retail and fashion. She had developed her own brand of women’s clothing and knew that she needed a physical location for her business to really grow. Because of that, she looked to a lender that partnered with the SBA to provide the $60,000 in funding she needed for renovating the perfect location. Now her business is growing quick as can be with both in person and online orders.
Advances on Export Orders
Similar to the problems faced by businesses seeking to fill their inventory rapidly, export businesses can sometimes receive massive orders that they will struggle to fulfill. Maybe they don’t have the cash on hand to pay their suppliers upfront for the materials they need, or perhaps they will need their laborers to work overtime to fill the order. Whatever the cause, the SBA is willing to guarantee up to 90% of the funds for an export cash advance to these businesses. This is something that most banks and commercial lenders do not offer, so the SBA is a key resource for any businesses needing this kind of help.
There are about as many uses for SBA loans as there are types of loans offered by the SBA. For this reason, whatever your need the SBA is worth investigating. Chances are, they have a loan program — or offer one through commercial lenders — that can help you. Even if you are not seeking capital, connecting with the SBA office in your area is usually a good idea, as their coaching and assistance with government contracting is second to none. Just remember to get the word out to other businesses as well, because the SBA should be every entrepreneurs best friend!