If you’re a small business owner, getting a business loan can be challenging to say the least. Luckily, the Small Business Administration (SBA) can often assist when credit terms are tight.

The SBA works with small businesses on loans and other growth support services. There are a variety of different loan types offered by the SBA depending on specific needs. The most common type of business loan is the “general” 7a loan, which can be used for a variety of purposes such as staffing. Other business loan types include microloans, which can be handy for not-for-profit businesses, as well as the real estate and machinery loan and the disaster loan. Given its wider reach, let’s take a look at the 7a loan program.

Types of 7a Business Loans

According to the SBA, “The 7(a) Loan Program is the SBA’s primary program to help start-up and existing small businesses obtain financing when they might not be eligible for business loans through normal lending channels.” Within the 7a loan program there are sub-types designed for specific business needs. Understanding the loan type best suited for your needs, before you apply, can improve your chances for approval. The four types of loans include:

• Export loan. As the name would suggest, the export loan is designed to help you export your products, be that to another state or another country.
• Express loan. This program will capture most small businesses and their needs. It’s designed to give you capital quickly to cover expenses or growth.
• Rural lending. If you have a rural business or a small business that is located far away from a major metropolitan area, the SBA can work with you on getting capital even though your business may have a slower repayment/growth rate.
• Special purpose loan. These loans are harder to get and are designed to help businesses that have been negatively affected by international trade.

No matter what loan type you want to apply for, you’re going to need a high quality application. Another small business counseling and mentorship organization, called SCORE, can offer tremendous value when it comes to finalizing your business loan application.

Sponsored by the SBA, SCORE offers workshops, training, templates, counselors and mentor networks to small business owners.  Beyond your business loan application, building a relationship with your local SCORE office can help you with additional support on filing forms, making better business decisions or simply keeping up with changes to laws that could impact your business.

The SBA Business Loan Process

When you are ready to secure an SBA loan, the SBA will pair you with a lender, and part of your loan is guaranteed by the SBA itself. So, in the event that you can’t repay, the lender will still see, at least a portion of, the principal repaid. With the 7a loan program, you can receive up to $750, 000 for your business. Even with this guarantee, getting an SBA loan isn’t always easy.

In order to qualify, a business owner must have been turned down for private financing, first and fit within certain size requirements. The SBA considers business size within your peer group. So, small carpenters are compared against other carpenters and so on. The HUBZone offers a full list so you can determine whether you fit before you apply.

The SBA doesn’t issue loans itself; it works with partner banks and offers them the guarantee. The SBA will provide you with information about who those banks are or a SCORE counselor can also help you find an SBA lender that fits your needs. This can be an arduous process since institutions often ask for years of financial history or a business credit report (you don’t yet have). However, the exercise can be worthwhile because it will prompt you to make sure all of your financial records are completely cleaned up and ready for prime time.