$19 Billion in Government Business Loans for Small Businesses

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Small businesses received nearly 100,000 U.S. Government small business loans in 2005. Women and minorities registered double-digit increases in the number of government business loans received in 2005.

This positive growth trend means that the President’s mission of providing an economic environment in which entrepreneurs can succeed is working. It is further evidence that small businesses are continuing to power the economy and create jobs. It’s also a positive thing for the taxpayers

American small business owners can learn how to take advantage of the federal government's small business loan programs at http://SmallBusinessCenter.com.

The process of getting a government business loan is fairly simple. The business owner submits a loan application to a participating lender for initial review. A copy of the application and a credit analysis are forwarded by the lender to the U.S. Government's Small Business Administration (SBA). Following SBA approval, the lending institution closes the loan and disburses the funds.

Start-up and existing small business may use the loan proceeds to:

  • expand or renovate facilities;
  • purchase machinery, equipment, fixtures and leasehold improvements;
  • finance receivables and augment working capital;
  • refinance existing debt (under some circumstances);
  • finance seasonal lines of credit;
  • construct commercial buildings; and/or
  • purchase land or buildings.

Congress created the SBA in 1953 to "aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns." Since its founding on July 30, 1953, SBA has delivered about 20 million loans, loan guarantees, and other forms of assistance to small businesses.

In 2005, the SBA guaranteed 88,912 small business loans through its flagship 7(a) business loan program for a total of $14 billion, a 23% increase in the number of business loans compared to the previous year. In the Certified Development Company loan program, also known as the 504 program, 8,979 loans were made for $4.9 billion.

Business loans to women were up 39% over 2004. Loans to African Americans were up 41%. For Hispanics, the increase in loans was 19% and for Asians it was 17%. Women received $3.3 billion in government small business loans, representing 17% of total dollars, an increase of 27% over the previous year. Minorities received $5.8 billion in small business loans, representing 31% of total dollars, an increase of 26% over the previous year.

Small businesses turned to the U.S. Small Business Administration for commercial financing in record numbers in 2005, securing 97,891 small business loans through its two main small business loan programs, setting a loan volume record for the fifth consecutive year. The figure is more than double the number of small business loans made in 2000.

“This is fantastic news for small businesses and we’re very pleased with the results our two main loan programs showed in 2005,” said SBA Administrator Hector V. Barreto. “This positive growth trend means that the President’s mission of providing an economic environment in which entrepreneurs can succeed is working. It is further evidence that small businesses are continuing to power the economy and create jobs. It’s also a positive thing for the taxpayers,” Barreto added. “In 2004 it cost $100 million in government dollars to operate the 7(a) program. In 2005, modest fees paid by the lenders and borrowers have allowed us to meet the extraordinary demand for these loans and dollars without taxpayer expense. We’re proud these cost-effective programs have been a win-win for small businesses and the American taxpayer.”

Be sure to check out http://www.SBASmallBusinessLoans.com for more detailed information on how to take advantage of various government programs and services for small businesses.

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Eliot Hobbs
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