Small Business Management
The Small Business Administration (SBA) strives to protect and strengthen the interests of small business in the United States. Not only does it have many financing programs, it also offers many others such as legal help, government contracting and disaster assistance. The following programs are designed to help finance both start-up and existing businesses that do not qualify for traditional loans.
1. Capital access programs (CAPs)
CAPs are designed to generate more funding for businesses that do not qualify for loans. The office of Capital Access works with financial institutions to reach these small businesses and offers them access to capital, following certain terms and conditions to make that there is sufficient monitoring and oversight (Office of capital access About-us).
Small businesses can use CAPs by contacting a lender that is participating in the program who will them conduct their own loan application process and determine specific loan terms.
An example is the New York State’s capital access program, which is a newly expanded $19 million dollar program. To incentivise small business lending, the New York State provides funding to financial institutions for loan loss reserves. This CAP has largely increased not only on the amount of capital but also on the number of institutions that can join the program (Empire State Development).
2. Revolving Loan Funds (RLFs)
RLFs are a source of financing for the development and expansion of small businesses. The main characteristic of RLFs is that they replenish themselves, meaning that they use interests and initial payments on old loans to issue new ones. Small business often use these loans to bridge the gap between the limited amount they can access through traditional loans on the private market and the actual capital they need to sustain their business (CDFA - Revolving Loan Fund).
When elaborating these funds, it is crucial to make
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