Contract Loan Program

Obtaining a contract loan can help small businesses compete for government contracts. The United States government is one of the largest purchasers on the market, and government contracts typically require a large amount of funding to obtain because of the high investment needed. The Small Business Administration is working to give small business owners a shot at contracts by guaranteeing loans given by private lenders.

Federal Loan Guarantees

The SBA is not a direct lender to small businesses. Instead, the SBA works with private lenders who hold borrowers to certain criteria. When a lender says a borrower qualifies for an SBA-guaranteed loan, that means the particular borrower meets the government strict standards. The lender can then extend the loan with a guarantee the federal government will purchase the loan. These SBA loans are typically short-term loans that allow the business to develop the project and seek the contract.

Examples of Contract Loans

  • Prime Contracts Program - designed to increase the number of small businesses with government contracts

  • Subcontracting Assistance Program - encourages small businesses to collaborate with major government contractors

  • Certificate of Competency Program (COC) - provides guarantees to businesses who have lost contracts because they were not perceived to be financially strong enough to handle the work