The U.S. Small Business Administration is a government agency that provides financial support to small business operations and independent entrepreneurs. One of their main purposes is to provide relief in the form of loans to businesses that are either struggling or are interested in expanding their business.
The loans that are indirectly issued by the U.S. Small Business Administration to small businesses and entrepreneurs are commonly referred to as “SBA loans.” The loans may also be indirectly distributed from local and state level small business administrations that are set up to offer help to small businesses in local and state communities.
One common misconception about SBA loans is that they come directly from these government administrations, but this is not the case. Instead, small business administrations indirectly help fund small businesses and entrepreneurs. They do this by working closely with lenders, setting guidelines for loans made by lenders, and making it easier for small business owners and entrepreneurs to obtain SBA loans.
Since the start of the pandemic, small business administrations and SBA loans have frequently been in the spotlight due to some of the new regulations regarding loans and relief for small businesses that have been impacted by COVID-19. Some of the programs that are currently being offered by the U.S. Small Business Administration through their website include the following:
- The Paycheck Protection Program;
- The Shuttered Venture Operators Grant Program;
- The Restaurant Revitalization Fund;
- SBA Debt Relief;
- The COVID-19 Economic Injury Disaster Loan Program; and
- Cross-program eligibility options (which simply means that some small businesses and entrepreneurs may be eligible for more than one of these loan and/or relief programs).
If you are an entrepreneur or small business owner whose small business has been impacted by COVID-19, then you should contact a local small business lawyer or a small business administration office in your area for further assistance with financial relief. Your small business may be entitled to a loan under one of these programs.
Are There Different Types of SBA Loans?
As previously discussed, there are several different types of SBA loans that small businesses and entrepreneurs may be eligible to receive. Aside from the ones mentioned in the above list, which relate directly to COVID-19 matters, there are also the standard SBA loans that small businesses and entrepreneurs can apply for, such as:
- 7(a) loans: According to the U.S. Small Business Loan Administration’s website, the 7(a) Loan Program is one of the most popular loan programs offered by the administration. These types of loans are best suited for small business owners who intend to purchase property, furniture, supplies, and/or fixtures. They can also be used to refinance current business debt or for short and/or long-term capital.
- 504 loans: The 504 Loan Program, also known as the Certified Development Companies Program or the CDC/504 Loan Program, is a good option for business owners who need long-term loans. These loans come with a fixed rate of up to $5 million dollars in order to expand businesses and create jobs for workers. Despite the fact that CDCs help regulate nonprofits, a business cannot qualify for this program unless it is a for-profit company.
- Microloans: The administration’s microloan program offers up to $50,000 to small business owners as well as certain non-profit childcare centers that are seeking capital to either start operating or expanding their businesses. According to the administration’s statistics, the average microloan issued is for approximately $13,000. Again, these loans are not directly issued by the administration, but rather by an intermediate lender.
In addition, small business owners may also be eligible to apply for a general loan or one of the administration’s disaster relief loan programs.
To learn more about the various SBA loan options and eligibility requirements, small business owners can either visit the website for the U.S. Small Business Loan Administration or contact a small business lawyer in their area for further legal advice and information about such programs.
What If I Have a Dispute Regarding a Loan?
Small business owners who have a dispute concerning an SBA loan may have a number of options available to them. For example, if it is a criminal matter, such as loan fraud or forgery, the small business owner may want to press criminal charges.
On the other hand, if the dispute involves a civil issue, such as for loan qualification, then the small business owner may be able to file a lawsuit against the opposing party for monetary damages. It is important to note that small business owners who have a dispute regarding a loan that falls under either the 7(a) or 504 loan programs, will need to complete and file a litigation plan with the U.S. Small Business Administration for approval.
All other matters may be handled by contacting the Office of Hearings and Appeals, or by consulting with a local small business lawyer.
What if I Have a Loan Dispute Related to COVID-19 Matters?
The Office of Hearings and Appeals (OHA) is a government agency that has been established as part of the U.S. Small Business Administration. As their name implies, they are charged with the task of holding administrative hearings and/or appeals and making decisions regarding these types of proceedings for SBA programs, including SBA loans.
So, for instance, if a business owner has received a certain amount for an SBA loan or has been denied an SBA loan, they can file an appeal with the OHA within 45 days of receiving the initial decision. Appeals can be filed either through the email address or fax number provided on the OHA’s website, and must be filed in accordance with the rules provided there as well. Once submitted, a judge will issue a written decision within the next 90 days.
Some examples of the types of appeals that the OHA offers include the following:
- SBA loan size appeals;
- Eligibility appeals;
- NAICS appeals;
- SDVO appeals;
- WOSB and EDWOSB appeals; and
- CVE protests and appeals.
If a business owner has already undergone the relevant OHA appeals process and is not satisfied with the decision, then they may want to consider contacting a local small business lawyer immediately for legal advice regarding further next steps.
Do I Need a Lawyer for Help with an SBA Loan?
Although you do not necessarily need to hire a small business lawyer to apply for an SBA loan, it may be in your best interest to do so if you do not understand the SBA’s loan application requirements or if your request to receive an SBA loan has been denied by the administration..
A small business lawyer who has experience in handling SBA loan matters will be able to assist you with the loan application process. They can also provide legal guidance on other related business and/or financial issues that your business may currently be facing. Your lawyer can also help you in resolving a loan dispute or with settling a matter that involves one of your employees.
In addition, should you need to attend a settlement conference or appear in court to resolve your particular SBA loan issue, your lawyer will be able to provide legal representation at either of these proceedings as well.
Finally, if you believe that your loan application was wrongfully denied or that you did not receive the amount of financial support that you think is appropriate based on the size of your small business, your lawyer will be able to explain why that may have happened. They can also discuss the next steps you should take, and can even communicate with the SBA on your behalf. Your lawyer will also be able to help you navigate the appeals process should it be necessary.
