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Small Business Administration
Small Business Administration Loan / Grant
The US Small Business Administration (SBA) does not offer grants to start or expand small businesses, though it does offer a wide variety of loan programs for business start-ups and expansions including 7(a), 504 and disaster assistance.

SBA 7(a)
SBA 7(a) loans are the most basic and most used type loan of SBA's business loan programs. The ‘7(a)’ name comes from section 7(a) of the Small Business Act, which authorizes the SBA to provide business loans to American small businesses. A key concept of the 7(a) guaranty loan program is that the loan actually comes from a commercial lender not the government. All 7(a) loans are provided by commercial lenders called ‘participants’ because they participate with SBA in the 7(a) program. Not all lenders choose to participate, but most American banks do. There are also some non-bank lenders who participate with SBA in the 7(a) program which expands the availability of lenders making loans under SBA guidelines.

SBA Guaranty
7(a) loans are only available on a guaranty basis. This means they are provided by lenders who choose to structure their own loans by SBA's requirements and who apply and receive a guaranty from SBA on a portion of this loan. The SBA does not fully guaranty 7(a) loans. The lender and SBA share the risk that a borrower will not be able to repay the loan in full. The guaranty is a guaranty against payment default. It does not cover imprudent decisions by the lender or misrepresentation by the borrower. Under the guaranty concept, commercial lenders make and administer the loans. Under the program a business applies to a commercial lender for their financing. The lender decides if they will make the loan internally or if the application has some weaknesses which, in their opinion, will require an SBA guaranty if the loan is to be made. The guaranty which SBA provides is only available to the lender. It assures the lender that in the event the borrower does not repay their obligation and a payment default occurs, the Government will reimburse the lender for its loss, up to the percentage of SBA's guaranty. Under this program, the borrower remains obligated for the full amount due.

Requirements
Loan documentation requirements may vary; contact your lender for information you must supply. Common requirements include: purpose of the loan, history of the business, financial statements for three years (existing businesses), schedule of term debts (existing businesses), aging of accounts receivable and payable (existing businesses), projected opening-day balance sheet (new businesses), lease details, amount of investment in the business by the owner(s), projections of income, expenses and cash flow, signed personal financial statements and personal resume(s). You should take the information, including your loan proposal and submit it to a local lender. If the lender is unable to approve your loan, you may ask if the lender can consider your request under the SBA loan guaranty program. Under this program, the SBA can guaranty up to 85% of a small business loan; however, the lender must agree to loaning the money with the SBA guarantee. The lender will then forward your loan application and a credit analysis to the nearest SBA district office. After receiving all documentation, the SBA analyzes the entire application, then makes its decision.

SBA 504 Certified Development Company Program
The 504 Certified Development Company (CDC) Program provides growing businesses with long-term, fixed-rate financing for major assets: Purchase land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; constructing, modernizing, renovating or converting existing facilities; and purchasing machinery and equipment. 504 program loan proceeds cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing. See Minnesota Business finance Corporation below for more information on the 504 loan program.

SBA Disaster Assistance
The SBA Disaster Assistance Program provides financial assistance for those who are trying to rebuild their businesses in the aftermath of a declared disaster. SBA Disaster Assistance is a loan program to help businesses with long-term rebuilding and repairing pursuant to a declared disaster.

Minnesota Business Finance Corporation
The Minnesota Business Finance Corporation (MBFC) is a Certified Development Company authorized by the US Small Business Administration (SBA) to originate and service SBA 504 loans.

SBA 504 Loan Program
The SBA 504 loan program is "the money that makes America work." As a nonprofit CDC, MBFC, a member of the National Association of Development Companies (NADCO), promotes economic development throughout Minnesota. The SBA 504 loan program is economic development financing specifically designed to stimulate private-sector investment in long-term fixed assets to increase productivity, create new jobs and increase the local tax base. This is done by providing long-term, low down payment, reasonably priced, fixed-rate loans to businesses which have the highest probability of successfully creating new jobs and competing in the world marketplace.

Program Specifications
Structure: 50% bank or nonbank in first lien position; 40% SBA 504 in second lien position; and 10% equity injection. New business or special-purpose building will require 15% equity injection. New business and special-purpose building will require 20% equity injection.

Advantages of 504
Long-term, fixed-rate financing; terms - 20 years on real estate; 10 years on equipment; and, low equity injection - 10 to 20% preserves working capital and increases return on equity.