Using an SBA-Guaranteed Loan to Fund a Business Acquisition

Using an SBA-Guaranteed Loan to Fund a Business Acquisition

SBA guaranteed loans are not directly made by the Small Business Administration; rather, this government agency gives guarantees to repay a certain portion of the loan to the lender in the event that the borrower defaults. This is a key feature for a borrower. Because the lender takes on the risk, the lending requirements of each financial institution may be different.

Founded in the year 1953, the SBA is a government agency tasked with assisting US-based small businesses. The agency gives assistance through the four functions mentioned below.

Advocacy for Businesses: The Small Business Administration advocates for owners by reviewing existing and proposed legislation, and testifying frequently in congressional hearings. It conducts research on small businesses in the United States of America.

Business Financing: This gives small business many different financing options, which range from microloan and venture capital to private equity programs.

Entrepreneurial Development: This gives counseling for new entrepreneurs and small businesses throughout the nation.

Government Contracting: It works with other US government agencies to make progress towards meeting the 23% statutory objective to grant prime contracts to small-sized businesses.

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