What is an SBA Loan Guarantee?

The Small Business Administration provides business loan guarantees to private banks and lenders. The SBA itself does not extend loans to the public. Rather, a person who has been approved by the SBA can seek a private loan with the government's guarantee it will purchase a portion of the loan on the secondary market. 

Getting an SBA Guarantee

To qualify for an SBA loan you must first be approved by the SBA. You can apply with a private SBA lender, and the lender will then pass the application to the SBA if the company feels you will benefit from the assistance. In some cases, you may need to specifically ask for an SBA loan. The most common type of SBA loan is the 7(a) guarantee loan program because it is the broadest.

Locating an SBA Lender

SBA lenders meet certain criteria set by the federal organization. A lender chooses whether or not to participate in the SBA program, but if it does then it must meet the criteria. You can locate an SBA lender by asking multiple lenders in your area or looking for a listing online.