The SBA offers a number of different loan programs, for very specific purposes. The best known is the 7(a) Loan Program.
To be eligible for a 7a loan, a business must:
- Operate for profit
- Be considered a ‘small business’ under SBA guidelines
- Do business in the United States or its possessions
- Have reasonable invested equity
- Use other resources, such as personal assets, before seeking financial assistance
- Demonstrate a need for the loan
- Use the funds for a sound business purpose
- Not be delinquent on any existing debt obligations to the U.S. government
- Franchises are eligible, as long as they have the right to profit, commensurate with ownership
- Recreational facilities and clubs are eligible, as long as they are open to the general public, or membership is not denied or restricted to any particular groups
- Certain types of businesses are ineligible, including (but not limited to) businesses that limit memberships, teach religious beliefs, or are involved in political or lobbying activities.
You May Use a 7(a) Loan for:
- operational expenses, accounts payable, inventory
- seasonal financing, contract performance, construction financing, exporting
- revolving funds, under certain conditions
- purchasing equipment, machinery, furniture, fixtures, supplies or materials
- purchasing land and buildings
- constructing a new building, or renovating an existing building
- establishing a new business
- help to acquire, operate or expand an existing business
- refinancing an existing business debt, under certain conditions
An SBA video explains the various types of loans offered in more detail