How do start-up businesses engaged in franchise activities use credit?

Almost 38% of new franchising companies in start-up mode use lenders to finance their operations, compared with the national average of 23.1% for all small businesses that employ people.

How does the SBA assist small business owners?

The SBA provides many financial assistance programs to help small business owners become successful. These programs include loans, grants, venture capital, and bonds. The SBA also provides information on its website to help potential business owners plan the launch of their business and receive business management information.

How does one obtain an SBA loan?

The SBA creates the guidelines used by banks that offer SBA loans. Because the SBA has worked with the business owner to understand the business in order to secure the loan, the SBA guarantees repayment for the loan, making banks more secure when providing these loans.

Is an SBA loan a commercial loan?

Yes, an SBA loan is a type of commercial loan, structured according to SBA requirements.

What if I have other business loans available, such as a line of credit?

You will not receive an SBA-guaranteed loan if you have access to other forms of financing at reasonable terms.

What types of loans does the SBA offer?

There are many loan programs available, depending on your business, your location, your ownership, whom you serve, etc. Some programs include: the 7(a) Loan Program (loans for businesses with special requirements, such as exports assistance, companies affected by NAFTA, rural business loans, and loans in underserved communities); the CDC/504 program (long-term financing that helps develop communities); and the Microloan Program (small, short-term loans for certain types of businesses).

Owners of franchise companies tend to rely more on lenders to start their operations.

Owners of franchise companies tend to rely more on lenders to start their operations.

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