Small Business Startup Guide: SBA Loans and Funding Options

Complete guide to starting a small business including SBA loan programs, alternative funding sources, and step-by-step startup strategies for success.

Starting a small business requires careful planning and adequate funding. This comprehensive guide covers all aspects of business startup, from initial planning through funding options and early growth strategies. ## Small Business Administration (SBA) Overview **SBA Mission and Services** - Provides support to small businesses through loans, counseling, and advocacy - Guarantees loans made by partner lenders - Offers business development programs and resources - Sets aside federal contracts for small businesses - Advocates for small business interests in government **Definition of Small Business** - Varies by industry and business type - Generally under 500 employees for most industries - Revenue limits for some service industries - SBA size standards determine eligibility - Must be independently owned and operated ## SBA Loan Programs **7(a) Loan Program** - Most popular SBA loan program - Maximum loan amount: $5 million - Can be used for working capital, equipment, real estate - Government guarantees up to 85% of loans under $150,000 - Interest rates tied to prime rate plus margin **504 Loan Program** - For real estate and equipment purchases - Long-term, fixed-rate financing - Three-party structure: SBA, bank, borrower - Down payment as low as 10% - Maximum project cost: $5.5 million **Microloans** - Small loans up to $50,000 - Average loan size: $13,000 - For startups and small businesses - Provided through nonprofit intermediary lenders - Technical assistance often included ## Alternative Funding Sources **Traditional Bank Loans** - Conventional term loans and lines of credit - Typically require strong credit and collateral - Lower interest rates than alternative lenders - Established relationships beneficial - Strict qualification requirements **Online Lenders** - Faster approval and funding processes - Less stringent credit requirements - Higher interest rates than traditional banks - Terms from 3 months to 5 years - Good for businesses needing qui