How The Government Can Help Your Small Business

Did you realize the United States government can help you seek financial aid for your small business? Yes, the government does that, and it has been successfully accomplishing this since 1953.

Perhaps if you’re looking for a means to help your company grow, now would be a good time to discover how the federal government can help you with your small business needs.

In order to get a thorough comprehension of the process, let me first expose you to the government’s leading agency that is accountable for assisting the nation’s small enterprises, the United States Small Business Administration.

The United States Small Business Administration, otherwise known as SBA, is a United States government agency that was founded on the 30th day of July, 1953.

The SBA is largely responsible for rendering indirect financial aid to entrepreneurs and small business establishments. Typically, the primary role of the SBA is to provide several financial assistance programs to such businesses that have been engineered to meet essential financing needs.

In order to do this, the SBA has constituted many loan programs and financial assistance strategies which have been thoroughly developed to suit the needs of entrepreneurs and minority-owned business enterprises.

Among all of these programs, the three-most fundamental forms of assistance that is provided by the SBA are that of Guaranteed Loan Programs, Bonding Programs, and lastly, Venture Capital Programs.

How can these programs specifically help you, you ask?

For starters, the Guaranteed Loan Program will work in a manner that the SBA will assist you to seek financial assistance, instead of directly providing you with one.

Since the SBA has formed partnerships with third-party lenders, community development organizations, and microlending institutions, these third-party partners will then be able to directly provide you with loans and other forms of financial assistance. This setup is essentially similar to procuring a commercial loan, but it is easier and more efficient because the SBA will serve as your guarantor, meaning it will assure the third-party partner that you have the capacity of repaying the loan and that you will, without a doubt, repay it.

The Bonding Program, also called the SBA’s Surety Bond Guarantee (SBG) Program, can assist business contractors in obtaining surety bonds by way of standard commercial channels. To comprehend this better, a small business owner should first know what a surety bond is.

A surety bond is an agreement between a surety (someone who agrees to assume responsibility for the debt of the primary borrower in cases wherein the borrower fails to assume his or her responsibilities), a small disadvantaged business contractor and a project owner.

Through the SBG program, the SBA will enter into a contract with a surety stipulating that the SBA will take responsibility for a percentage of loss in the event that the primary borrower fails to adhere to the terms of the loan agreement.

The Venture Capital Program, however, was created to work through the SBA’s Small Business Investment Company (SBIC) Program wherein the SBA could indirectly provide venture capitals to micro businesses and micro entrepreneurs.

Small Business Investment Companies are privately owned and managed investment funds that are licensed and regulated by the SBA. These businesses could help small businesses by providing them with funds by means of debt or equity, just like venture capital, private equity and private debt funds. Nevertheless, they differ in a way that SBICs will only restrict their investments to eligible business concerns that are defined by the SBA.

Comments are closed.