Besides the Small Business Administration (SBA), various government agencies at the municipal, regional or state level also provide business loans. Such loans are made available because cities and regions are interested in promoting the economic health of their region as well as in creating and retaining jobs in their area.
Often the toughest part about such government business loans is finding out what loan programs are available and who to approach for these loans. Sometimes the loan is sanctioned by the local agencies directly but often the local agency helps with the loan application and provides referrals.
In order to receive such loans, the business owner must have a sound credit rating and should be well equipped with all the documentation including a detailed business plan for quick approval of the loan.
Government business loans may be approved for the acquisition of an existing business, working capital requirements, leasing of equipment, buying commercial property, for expanding the business internationally or for buying franchisees.
Because of the greater risk that a business loan entails, the rules for acquiring these loans are comparatively strict. In a loan application, the business proposal is probably the important document that needs to be submitted to the lender institution. This is studied in detail and depending upon the feasibility of the business plan, the loan applications are accepted.
A good business plan should include the summary of the business with a description of the business type and industry, the growth potential, competitive advantage, the target market, the financial projections, background of the owner as well as the loan repayment plan. Including other information such as strategy for marketing, detailed description of the products or services, the projected growth as well as the background of the entire management team also helps.
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