How SBA Loans Contribute to Tucson’s Economic and Business Health | Economic news
Special for Arizona Daily Star
I want to tell you the story of two organizations, neither of which is headquartered in Tucson, but which, combined, greatly contribute to the economic and commercial health of the city.
The first organization is the Small Business Administration and their 7 (a) loan program, the most versatile and popular program they offer. SBA loan programs were created in 1953 with the aim of ensuring the availability of capital for entrepreneurs. Yes, this is a big government initiative, in fact a multibillion dollar investment program.
The SBA helps small businesses get loans. They don’t lend the money directly to the business. They work with lenders, community development organizations and microcredit institutions. The SBA sets guidelines for loans and provides loan guarantees to their lending partners. In other words, if a borrower / business follows the guidelines prescribed by the SBA, the actual money lender knows that the loan they are giving to the business is guaranteed by the government.
Loans can be up to $ 5M, with many loans less than $ 1M. The less than $ 1 million loan threshold is for most small business needs, but it is a niche that is typically untargeted by many commercial lenders. SBA 7 (a) secured loans fill this void very well.
Loans can be for working capital, start-up financing, starting a franchise, purchasing equipment and other assets, financing an inventory, buying or improving real estate. , buyout of a partner, new locations, commercial debt consolidation and other considerations.