3 Quick Facts about Small Business Administration Loans


The SBA’s Guaranteed Loan Program

The United States Small Business Administration was established in the 1950’s as an independent federal agency responsible for counseling, helping, and protecting small American businesses. When a business is trying to raise funds, the SBA can help with: 1) acquiring the loan, 2) guaranteeing a bond, and 3) funding some of the venture capital.

The SBA offers a wide range of financial assistance programs, but this article will focus on their guaranteed loan program. The benefit of getting a loan that is supported by the government is that you’ll get a lower interest rate and a longer repayment option. BUT, it’s often difficult to qualify.

Small Business Loan

To be clear, the Small Business Administration does NOT directly loan money.

But, the Small Business Administration DOES:

  1. Set guidelines for the loan.
  2. Facilitate the loan with a 3rd party lender. Money is acquired through traditional lenders (banks), community development programs, and microlending institutions.
  3. Guarantee repayment. This means less risk for the lender.


The SBA’s Guaranteed Loan Program is really just the government’s term for debt financing, where you, the business, need money for your operations and you are agreeing to the pay back the principal plus interest to the lender.

Now that you know how the SBA loan program operates, be aware: most businesses get turned down and have to find other ways to get funded.

Learn More

To learn more about other business loan options, check out our Buyer’s Guide for Business Loans.

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