US Government Small Business Loan:

When you want to start a business of your own you would wonder how to start, as it would require investment. Well you need not worry the US government small business loan has various plans under which they provide loans to people who are willing to start their own small scale businesses.

The US government funds a lot of small business projects. There are many loans available for people who want to start a business. But for US government small business loan typically there are 7 (a) loans. The section 7(a) of the Small Business Act allows the agency to give out loan to the small businesses that are being set up in The United States.

The lenders who are a part of this program give out these loans. There are quite a number of banks in America who are a part of this program. Besides the banks there are many lenders who are not associated with the bank but are part of this program.

The loans that the US government makes available for the small business is only on guarantee basis, which means that the lenders apply for the loan and get a security on a portion of the loan. Under this concept there are commercial lenders who supervise these loans. It is up to the lender to decide whether he will give out the loan internally or if there were some fault with the application then he would look for a guarantee. This is done because in cases where the borrower fails to make a payment the government would refund the unpaid amount to the lender depending on the percentage.

In order to get a loan, the candidate must first be qualified. The repayment of the loan from the money incurred from the business is the main concern in the loan decision process but there are other factors like collateral, good character, and owner's equity contribution, management capabilities that are also important.

For qualifying for the loans that the US government provides to the people with small businesses the person has to fulfill certain criteria. The US government small business loan has made these criterias broad enough so that it can fit in as many people as possible. The criterias involve a diverse variety of businesses, which the loans can finance. The businesses should meet the standards that are set by the government and should be a profitable business. Eligibility criteria for all loans would include use of proceeds, the size and the type of business, and the availability of funds from other sources. These businesses should not have internal resources prior to starting to bring in the money. Besides there are some other plans that would require some special additional criterias to be fulfilled.

Now suppose due to some reason the lender is unwilling to give the loan despite approval from the government then no one can force the lender to give the loan. Moreover the government itself cannot lend out the loan because they give it out to the agencies and banks. If you want a loan for your business set up then you have to fulfill the criteria as well as be creditworthy.

The loan applicant should have the capability to pay back the loan amount and should follow all the laws of the society. For this reason a statement of personal history is required while filling the application.

Apart from fulfilling the eligibility criteria the candidate who is applying for the loan should be well aware of the terms and conditions that are involved in the loan. The maximum amount that you can get as a loan amount is $2 million dollars. If you take this amount then 75% of this has to be guaranteed.

The US government small business loan generally sponsors the small business loans for a long period. The maturity of your loan depends on your ability to pay back the loan. It also depends on the purpose for which the loan has been taken. You would be surprised to know that the real estate and equipment loans have extended to as long as 25 years.

The loans for working capital usually go up to as long as 7 years except in some cases where it extends to 10 years for the repayment benefit. For the maturity and repayment there are also some qualifications. Depending on the type of business these terms are determined. So before you sign up be sure that you have gone through these and you know your time limits of paying back.

When loan earnings will be used for a mixture of purposes, the utmost maturity can be a biased average of those maturities that falls out in level payments. Besides you can even consider paying it off in equal monthly installments on the permissible maturities of all purposes, which results in unequal payments, with a greater requisite for settlement during the early term of the loan.

So if you are willing to get a US government small business loan of your own then you can consider signing up for a loan from the various plans that are provided by the US government. If you fill in the criterias and are capable enough to pay back the loan then it could be beneficial for you to get a loan. The maturity periods are quite long so paying back is not a problem. Moreover the criteria for qualifications are quite broad and you can easily fit into it. The only thing that you should take care about is the collateral that you give as a guarantee and make all the documents clear.