How SBA loans contribute to the economic and business health of Tucson | Business News

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The Small Business Administration helps small businesses get credit. They don’t lend the money directly to the company. They work with lenders, community development organizations, and micro-credit institutions.

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Arizona Daily Star special

Let me tell you the story of two organizations, neither of which are headquartered in Tucson, but taken together they make significant contributions to the city’s economic and business health.

The first organization is the Small Business Administration and their 7 (a) credit program, the most versatile and popular program they offer. The SBA loan programs were established in 1953 with an emphasis on ensuring capital availability for entrepreneurs. Yes, this is a major government initiative, actually a multi-billion dollar investment program.

The SBA helps small businesses get credit. They don’t lend the money directly to the company. They work with lenders, community development organizations, and micro-credit institutions. The SBA sets guidelines for the loans and provides loan guarantees for its credit partners. In other words, if a borrower / business meets the guidelines mandated by the SBA, the actual lender knows that the loan they are providing to the business is guaranteed by the government.

Loans are up to $ 5 million, with many loans below $ 1 million. The less than $ 1 million credit threshold is where small business needs are greatest, but it’s a niche that many commercial lenders generally don’t focus on. SBA 7 (a) guaranteed loans fill this void very well.

Loans can apply to working capital, start-up financing, starting a franchise, purchasing equipment and other assets, financing inventory, buying or upgrading real estate, buying out a partner, new locations, consolidating corporate debt, and other considerations.

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