Globally, small to medium-sized enterprises (SMEs) form the anchor of most economies and are fundamental to the growth of nations. In the US alone, SMEs account for 99% of the country’s 28.7 million firms. They are the USA’s backbone—the powerhouse of both country and national stability. The SBA was formed around this ethos and exists primarily to help companies expand and prosper.
A surprisingly exposed ‘powerhouse’
Unfortunately, SMEs are also the most vulnerable to being rocked by outside forces or market volatility. It’s not uncommon for small companies to exist hand in hand, with little or no savings behind them to cover times of emergency or other market pressures.
Businesses can fall on hard times for any number of different reasons—very often, issues completely out of their control that can’t be planned for or moderated. Whatever the cause, in the US, there is thankfully an established safety net of funding processes that can help struggling businesses through difficult times.
The role of the SBA
The Small Business Administration (SBA)offers loans for exactly this purpose. SBA loans are a form of government-backed lending which provides support to SMEs and entrepreneurs. As the loans are backed by the government, lenders are far more likely to approve applications since they know the loan will be repaid – even if the borrower should default.
Since its inception in 1953, SBA funding has helped countless enterprises through difficult times. More recently, SBA support has proven invaluable through the on-going Coronavirus crisis. On 27th March 2020, President Trump authorized the new CARES Act, which provisions for an extra $376 billion of additional funding relief for American workers and businesses.
Coronavirus aside, SBA loans can also be used for a variety of different purposes, to help your business weather bad times or expand into different sectors. Some common areas where the scheme can help SMEs include:
Start-ups and acquisitions
SBA loans can provide start-up funding, helping new businesses progress quicker. Also, for established companies, loans can be used to fund mergers or acquisitions. As the credit is guaranteed, it can provide a risk-free catapult for ventures to grow and expand.
Working capital
SBA funding can be used as working capital to keep companies up and running and see them through catastrophic events like Coronavirus. The day to day running and meeting of expenses is essential to keep companies afloat – and keep their employees at work.
An SBA loan can provide a valuable lifeline through times of trouble when a company finds it challenging to make ends meet. If your business is experiencing problems in any form, it’s worth approaching the SBA to seek assistance. Your SBA advisor will be able to provide guidance and assistance on the funding that’s available to you.
Franchising
The costs of setting up a franchise network can be huge; however, your SBA administrator will work with you to identify areas most suitable for funding. Given the potential profits generated by franchising, an SBA loan can be the perfect aid in helping your company realize its potential from expansion.
Debt refinancing
It’s not uncommon for businesses to find themselves bound by restrictive or prohibitive loan agreements – perhaps with unscrupulous lenders.
If you find yourself bound to a restrictive loan, apply to the SBA for loan restructuring and debt consolidation. In almost all cases you will discover SBA rates and terms vastly more accommodating than those of other institutions
Expansion, improvements, and renovations
The ultimate goal of any company is to grow. The SBA was formed around this ethos and exists primarily to help companies expand and prosper. Most businesses will, at some point, reach a crossroads where they need external investment to grow. Using money provided by the SBA allows this.
The key is not to struggle alone. Support is available if you reach out for it.
