Small businesses and franchises of any development stage can apply for
conventional loans. However, because these loans are not guaranteed by the
federal government, banks prefer to lend to companies that demonstrate a
strong ability to service the debt and have significant collateral to cover the loan if the company ultimately cannot pay back the loan. In addition,
business owners seeking these loans are usually required to have
exceptional FICO scores, a reasonable debt to worth ratio and provide a solid business plan and projections.
SBA loan programs lend to small businesses unable to secure financing
on reasonable terms through normal lending channels. The loan programs
are operated through private-sector lenders that provide loans which
are, in turn, guaranteed by the SBA. The Agency has no funds for
direct lending or grants. Most private lenders are familiar with SBA loan programs so interested applicants
should contact their local lender for further information and assistance
in the SBA loan application process.