Houston: Finance Your Small Business with The BORSA Plan and SBA

As you’re searching for funding opportunities in Houston, know that there is a smart, legal solution through The BORSA Plan that can be used in conjunction with an SBA 7(a) loan. The DRDA Certified Public Accountants are available at 281-954-6040 to help you learn more.

The Small Business Association (SBA) has a variety of programs to help small businesses in Texas grow and prosper. Many small businesses are eligible for a SBA loan. There are criteria and guidelines to help you determine if your small business is one of them.  SBA provides a number of financial assistance programs for small businesses including the 7(a) loan, which is the most basic and most commonly used loan program. It can be used for a wide variety of needs such as the purchase or expansion of a building, equipment, inventory and working capital of a small business. The 504 is a loan for fixed assets only such as land and buildings used for economic development within a community. Disaster assistance loans are used to help small businesses and individuals recover from losses due to a natural disaster.

Most often, the 7(a) is the loan you will use for starting or expanding your small business. The SBA does not provide the actual loan, but rather works with a financial institution to guarantee a portion of the loan. By guaranteeing a portion of the loan, the SBA removes of the risk from the bank or other lender making it easier for the small business owner to be approved for the loan.

• Who is the Best Candidate for an SBA Loan?

The best candidate for an SBA loan will have an established credit history that shows the borrower's reputation for paying his or her debts on time. Until your small business establishes its own credit, your personal credit history will be used to determine creditworthiness. Everyone who owns 20% of the business or more must be able to personally guarantee the loan. That means each owner must be credit worthy as well as meet the other qualifications for eligibility.

There are other eligibility requirements that must be met to qualify for an SBA loan. Your small business must meet size standards that are determined by the number of employees as well as annual receipts. These standards vary according to several factors, including the industry in which your business operates.  A small business must be a for-profit enterprise and may also need to meet other criteria specific to their industry and loan details.

• What's The Bottom Line on SBA Loans? 

The SBA provides the guarantee to a financial lender that the loan, up to the amount of the guarantee, will be repaid in the event of default by the borrower. It has specific, detailed criteria that must be met by the borrower and also requires the lender to structure their own loans by SBA standards. The best way to make sure that you are applying for the correct loan program and that you fulfill the eligibility requirements is to speak with a loan officer who specializes in SBA loans at the financial institution you want to approach as your lender. By working with a loan officer who specializes in small business financing guaranteed by the SBA, you will have the best chance of being approved for your loan.