As larger franchise continue to grow and take over the market place small businesses find them selves falling behind financially. With recession and the hard times it has created since 2008 small business continue to struggle to thrive and grow. Throughout this struggle the Small Business Administration (SBA) Loans programs have come up with a way to help the small businesses stay afloat. They help small business get access to financial assistant programs that have been create to help meet their needs including, debt, company growth, general company needs and capital. The SBA does not personally give the loans to the small businesses, but it helps give regulation on how the small businesses can receive loans whether it be through, micro lenders, investors or community organizations. Four beneficial programs that exist to help businesses are: Section 7(a) Loan Guaranty Program, Certified Development Program Company (CDC) 504 Loan Program, Small Business Investment Company (SBIC) and Micro-Loan Program. These programs provide and alteration to policy to help close the gap during economic disruptions. Understanding these programs, how they work and if they are efficient are key to deciding if this is helping or doing nothing for the small business industries.
The four SBA programs give small businesses and opportunity to get financial help through loans when usually they would be denied. Because of the economic conditions it makes it harder for business to maintain their debt and continue to grow and keep everything the same as before the economic shock. One program is the Section 7(a) Loan Guaranty this is a loan program that can be used on general business, fixed assets and working capital. It is a large loan given by a bank or lender. Conditions for this loan are set by purpose by the lender and collateral of the company is used, personal can be used as well (i.e. the owners home). The CDC/504 Program also provides loans to small businesses that are unable to get financial assistance from private lenders. Although it does differ from 7(a) Loans in two ways, “The 504 loans can only be used for fixed assets (i.e., land and buildings) and have fixed interest rates (under the 7(a) program, rate may be fixed or variable” (Urban Institute 3). In addition, they can receive funding from the CDC/504 through community organizations.
The Micro Loan program provides small businesses and some community organizations with small loans that can be used for start up or growth.
As a means to assist small businesses during the recession, the current US administration proposed to increase the loan size cap for standard CDC/504 and 7(a) loans to $5 million. A similar proposal ...
...y expand their sales base by having smaller businesses sell their products where it would be economical unfeasible for them to set up a branch. Practitioners such as bankers can provide support in the form of soft money to new businesses such as partial grants which do not have to be paid off until the business reached a certain size or level of profitability. (Disabilitymeansbusiness.com 2013)
If the federal government support the small business financially, this may result in more prospurity, and co9vergae of clinical shortage . It is important to assign deligates to persuave some banks to l begin accepting applications from financial institutions who are interested in becoming Community Advantage lenders. It is essential to lobby the government to join thousands of partnerships , and focus on health,, education and welfare. The role will be more effective if we expand the partnership globally. global funding. Global funding can be significant in building program targeting HIV/AIDS, malaria and tuberculosis that are high risk from these diseases. Our focus should be focused on human development and not on energy development.
Opening a restaurant can be expensive with the current average start costs coming in around half a million dollars. We can expect to reach or exceed those start-up costs due to the higher-than-average cost of living in the Northern Virginia area. The causal environment we seek to portray will mitigate some of these costs, but top notch talent is expensive. We already have some funding, and a few investors, but we will need to get a large amount of financing from other sources. Being a Military veteran, and my wife being a female minority, we are optimistic about getting the small business loans
?The mission of the Small Business Administration (SBA) is to maintain and strengthen the Nation's economy by aiding, counseling, assisting, and protecting the interests of small businesses and by helping businesses and families recover from disasters.?
When looking towards the SBA loan you will need to meet the following criteria to qualify. Your business must have had to be turned down by any type of financial institution first. Your business also needs to meet the size requirement that the government defines as a small business.
In the article, "Strategies for Enhancing Small-Business Owners' Success" by Susan Turner and Al Endres, it is claimed that there is no specific reason as to why small businesses are failing in today's America. They believe, however that two factors can cause the demise of small businesses. These factors are small business financing and the marketing plans associated with those businesses. Small business owners are finding it increasingly hard to acquire funds to start up and help maintain a foothold in the business world. The authors state that this is due to the rising risks of propositions for investors and acknowledge that small businesses have to resort to using their own resources such as their own funds and bootstrap financing. Another
Currently all the small business houses or the SMEs are praising the support of commercial finance companies all over the world. Mostly these financial organizations are established to provide loan or financial support to a variety of business needs to commercial customers. They have no provision for the general people as they only target business clients. Ranging from small retail stores to the manufacturing firms can obtain loans. Professionals like doctors, dentists, lawyers, etc can also apply for loans from these lenders to expand their in-house business.
Small Business Administration (SBA) - SBA loans are set up to help small business owners, but the execution of the program is challenging. Still, if you have time and patience, SBA loans have great terms. Put together a substantial business plan before applying and expect to wait several months for an answer. There are several different SBA loan types available, with loan amounts available up to $5 million, and rates are generally tied to market rates. The exception is microloans, which typically carry rates from 8
Unlike the CEOs of major public company whose personal financial situation has little effect on their companies’ borrowing, if you are a small business owner, your personal credit is a major factor influencing your company’s access to capital. The power of personal credit scores to predict small business loan repayment, the legal structure of many small businesses, and small business owners’ use of personal guarantees and personal borrowing to finance business operations all link small business owners’ personal credit to their companies’ access to capital.
As found by Hartangi (2007) that success of Micro finance depends upon the practices of that specific bank, which finance poor people, by quoting and example of BRI (Bank Rakyat, Indonesia) researcher says that they provide technical and moral support to the people they lend money, and make sure they do good, they also choose different collaterals like motorcycle, cars, cattle, and land etc to secure their loan yet making collateral stronger incase the client fails to repay and credits interesting for lower class community. Beside this, Risk management, internal audit, financial procedures, transparent system, dedicated staff, and clear incentives to staff and clients are the factors which contribute toward the successful lending of micro finances. Obamuyi (2009) says that poor credit culture and low risk management can result in low rate of return, which finally ends with the failure of the scheme. The risk of low rate of return can also be minimized by the assistance provided by the MFIs to develop the small business of clients (Zelealem, Temtime, & Shunda, 2003).
They lack capability for planning and budgeting their operations. Most surveys, reported that many SMEs lack access to finance. But when analyzing their situation, it was found that SMEs lack knowledge on costing and pricing. This saw a need to first build up strong financial literacy and business planning. With such capacity, it then becomes feasible for SMEs to access bank loans.
Overall, microcredit has helped millions of people around the world and it continues to have a great impact on poor people, informing them that all they need is a little ‘push’ or start-up money to begin creating a better life and subsequently a better community. Each organization has its own goals and purposes depending on the country where they reside as well as different challenges that have appeared. Microcredit is helping poor people and small business owners to better themselves as well as to their families and have their time, skills, and ideas utilized in an effective and positive way.
Nowadays, due to the growing competition and other influencing factors, businesses have to take out loans and different types of credit to make
Microcredit should not be mixed with microfinance, which addresses a full range of banking needs for the poor people. As the financial services of microfinance usually involve small amounts of money – small loans, small savings etc. – the term "microfinance" helps to differentiate these services from those which formal banks provide.