If you’ve been keeping up with our blog, you know that the Small Business Administration (SBA) is a great resource for any business owner in the U.S., even immigrants. Any business owned by documented aliens or foreign nationals is eligible for an SBA-approved loan, which means the U.S. government is eager to support immigrant entrepreneurs. Below, we have laid out what you need to know about SBA loans and how they can help your business grow.
In FY20, SBA made approximately 42,000 loans, totaling $22.5 billion through its 7(a) loan, which is its primary lending program. 7(a) loans are typically for amounts between $25,000 and $5 million, which means they can cover a wide array of business expenses. Meanwhile, the 504 program saw 7,000 loans totaling $5.8 billion, and the administration’s microloan program, aimed at businesses operating in underserved communities, saw $85 million distributed through 5,800 loans. While there are several other programs, these three made up the largest share of SBA loans.
An important thing to keep in mind is that SBA-backed loans are distributed through local lenders. This means that you will apply to a certified lending institution, such as a bank or credit union, who will then apply to the SBA.
Why is this a great option? Because having a federal government guarantee means you are more likely to be approved for your loan. For example, let’s look at the SBA’s 7(a) loans. When you apply for a 7(a) loan, the SBA guarantees the lender that the government will pay up to 85% of the loan in case of default. This makes it less risky for your lending institution, so they will be more willing to provide funds for your business.
For each loan above, it is easiest to get approved if you have LPR status and hold at least a 51% ownership stake in the company. However, if this is not the case, there are other qualifying factors that the SBA will consider. But these differ between each loan. What qualifies for a 504 loan may not necessarily work for a microloan.
Because the loans and application process can be difficult to navigate, it is best to consult with an advisor ahead of applying. In fact, the SBA has a resource partner, the Small Business Development Center, that specializes in just that! The development center has local chapters throughout the U.S. that are ready to help you.
If securing funding for your business has proven difficult, an SBA loan may provide the capital you’ve been looking for. See the links below for more information:
Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally-based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in 4 different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.
Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital and high-growth enterprises.
At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of U.S. and Canadian immigration and SBA loans.