The US Small Business Administration has a lot of programs which can be used to help small business owners. Each program has its own specific qualification and grant seekers are expected to respect them. Some of the SBA’s ways of helping small business owners are to provide a third party which will lend the owner money, to guarantee the owner that will find him a bond or find starting capital for small businesses. When you want to apply for and receive this types of financial support, you first need to research and better understand all the ways that the SBA is offering for you.
SBA’s help includes the most important financing needs such as debt financing, equity financing and surety bonds.
When it comes to debt financing, you need to know that the SBA’s not giving direct loans to individual small business owners. The SBA is collaborating with lenders, organizations and lending institutions which checks the guidelines given by the SBA and then after that decides whom to give the small business grants. The lending partners have the SBA’s guarantee that the money will be paid back so that they won’t be putting their work at risk. So, this means that when a small business owner applies for an SBA grant, he is actually applying for a commercial loan but with guidelines which are given and directed by the SBA.
All the requirements and rules created by the SBA can be changed as the Government changes their policy and their rules. All those alternations are made in order to meet the current economic conditions. SO, that is why you have to be careful when you are looking for information about this small business grants, because you can’t be applying based on the conditions which you have read in an old grant policy.
Many of the business contractors who cannot find surety bonds on their own, go to the SBA and apply for the SBG program, Surety Bond Guarantee.
A surety bond is actually a deal between a contractor, a surety – a person who agrees to be responsible for the debt and the owner of the project. The contract obliges the contractor to be responsible and to fulfill all the requirements that have been mentioned in the contract. If for any reason, the contractor does not fulfill his obligations, the surety assures that the project will be completed.
The guarantee of the SBA gives the surety a green light that the project can be started and that they can start providing bonds for the contractors.
The SBA can provide bonds reaching up to $5 million which contain bidding, performance and bonds. But, there are some special cases where bonds have reached $10 million.
There is another program connected with small business. The SBA Small Business Investment Company (SBIC) represents a public or private partnership for investment which is created to fill in the gaps between the capital that is available and the small business which are in a need of it. But, here too, the SBA does not give money directly to small business owners. They work with private funds for investment.