Since the SBA has formed partnerships with third-party lenders, community development organizations, and microlending institutions, these third-party partners will then be able to directly provide you with loans and other forms of financial assistance. This setup is basically similar to procuring a commercial loan, but it is easier and more efficient because the SBA will serve as your guarantor, meaning it will assure the third-party partner that you have the capability of repaying the loan and that you will, without a doubt, repay it.
The Small Business Administration is largely responsible for providing indirect financial assistance to entrepreneurs and small business establishments. In most cases, the primary role of the SBA is to provide several financial assistance program to small business that have been specially designed to meet essential financing needs.
The Bonding Program, also known as the SBAÃ¢â‚¬â„¢s Surety Bond Guarantee (SBG) Program, can help small business contractors obtain surety bonds by way of standard commercial channels. To understand this better, a small business owner should first know what a surety bond is.
A surety bond is an agreement between a surety (someone who agrees to assume responsibility for the debt of the primary borrower in cases wherein the borrower fails to assume his or her responsibilities), a small business contractor and a project owner.
Through the SBG program, the SBA will enter into an agreement with a surety stipulating that the SBA will take responsibility for a percentage of loss in the event that the primary borrower fails to adhere to the terms of the loan agreement.
The Venture Capital Program, on the other hand, was designed to work through the SBAÃ¢â‚¬â„¢s Small Business Investment Company (SBIC) Program wherein the SBA could indirectly provide venture capitals to small businesses and small business owners.
Small Business Investment Companies are privately-owned and managed investment funds that are licensed and regulated by the SBA. These companies could help small businesses by providing them with funds in the form of debt or equity, just like venture capital, private equity and private debt funds. However, they differ in a way that SBICs will only restrict their investments to eligible small business concerns that are defined by the SBA.
If you wish to know more about the programs and functions of the SBA, you can visit their website at http://www.sba.gov/.
About The Author
Iola Bonggay is an editor of TopGovernmentGrants.com one the the most comprehensive Websites offering information on government grants and federal government programs.
Dsenyo, founded and designed by Marissa Perry Saints, seeks to help women and artisans working their way out of poverty. Dsenyo is an ethical fashion company that operates as a social enterprise that supports living wage opportunities for workers in Malawi, Africa.