Government Guaranteed and Government Direct Sources of Financing

At all levels of government, there are a number of finance programs to assist you in making your business successful. In most cases, these government programs improve your chances of obtaining financing by providing both longer and more flexible loan terms. In limited instances, some state and local governments do provide direct financing. Guaranteed loans are loans made through commercial lending institutions that are backed by a government agency. With guaranteed loans, the commercial lending institution disburses all loan proceeds and collects all loan payments. Direct loans are loans made directly to the business by the government agency. Each government finance program has its own restrictions and unique qualifications. Program restrictions include geographical location, type of business, eligible uses of loan proceeds, maximum and minimum loan amounts, and required equity injection by the borrower. The first step in obtaining a government guaranteed loan is to contact a commercial lender in your area.