Alternative Loan and Bond Resources for Small Businesses
By Neil Wilcove

These economic times have been very trying on business and even more trying on small businesses. Most businesses need loans in order to run, whether to improve infrastructure, purchase equipment or simply to keep the lights on (hopefully temporarily). Banks are still not lending money like they were before the recession and, more than likely, the ability to obtain loans without having to put too much skin in the game is over - at least for now.

While difficult, there are still opportunities for small businesses through the federal government's Small Business Administration (SBA). The SBA provides valuable resources to companies that are typically just starting up or who have stayed small for many years. In addition to many tools and services, the SBA also helps with loans for those small companies. Instead of loaning the money directly, the SBA works with various lenders throughout the country to provide guarantees if the loans are not paid back. These guarantees provide incentives to the lending institutions to provide loans to small businesses. In addition to loans for businesses that qualify, the SBA provides guarantees for bonds to companies that need them, i.e. performance and payment bonds for construction projects. For instance, under the American Recovery and Reinvestment Act (ARRA) which was signed into law in 2009, the SBA's Surety Bond Guaranty program was increased from $2 million to $5 million. This is significant, especially in this economy because it allows sureties, who might be reluctant to provide bonds for a project, security through the SBA's Surety Bond Guarantee Program. Sureties are more likely to issue bonds to smaller companies given the SBA's program and the bond may be just what the small company needs to make it possible for them to compete in the marketplace.

It may be worth considering if you qualify for SBA services. As with many government offerings, there are not any easy answers. The numbers are based on revenue, type of industry and sometimes the number of employees you have. Nonetheless, if you need more information, the SBA website,, is user-friendly.

For more information regarding this article, please contact Mr. Wilcove at 770.818.1430 or by email at [email protected].


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