Which comes first—the business or the business loan?

Small business owners often find themselves stuck in the proverbial “chicken and egg” scenario. If they don’t already have an established business on their hands, they may not qualify for traditional business loans. But if they don’t have loans for start-up capital purchases, they can’t establish their business.

So, what’s a start-up to do? Try an SBA loan.

These federally backed U.S. Small Business Administration loans are designed with the needs of small business owners (or would-be business owners) in mind. Depending on the intentions of the business owners, they vary in loan size, terms, and uses. Typically, for start-up capital or to expand a business or franchise, the loans range from $25,000 to $2 million. For getting some working capital (i.e., buying equipment, etc.) or managing expenses, they can range from $25,000 for a term-based loan to $500,000/month for accounts receivable loans. You can even use them for purchasing commercial real estate or refinancing existing business debt.

As you can see, they’re pretty handy. But don’t expect to just go into a credit union or bank and walk out with a check for $25,000. There’s a pretty rigorous application process (it’s backed by a government agency—what do you expect?), and you’ll need to have a well researched business plan to prove you’re capable of pulling off your successful venture.

If your business has been around for two or more years, you probably can save yourself the hassle of an SBA loan and apply directly for a business loan from your financial institution. But if you’re starting up and have already been turned down for a traditional business loan, be sure to ask your business services rep about SBA lending. Even if they don’t offer SBA lending in-house, your bank or credit union can probably recommend an SBA lender that they trust.

So, if you’re dreaming of your own cheese shop/dentistry franchise/bakery/landscaping/you-name-it business, be sure to ask your financial institution about SBA lending.