Q. What is the Small Business Administration (SBA)?

A. Formed in 1953, the SBA’s mission is to “Maintain and strengthen the nation's economy by aiding, counseling, assisting and protecting the interests of small businesses and by helping families and businesses recover from national disasters.” In June 2006, Steven C. Preston (formerly a vice president of ServiceMaster) was sworn in as the 22nd administrator of the SBA.

Q. How do I obtain an SBA loan?

A. The SBA does not loan money; it provides loan guarantees to banks and other lenders so that small business owners can obtain financing more easily. You might say that the SBA acts as a “co-signer” for your loan. Typically the SBA will guarantee up to 85 percent of a loan, depending on the type of loan.

Q. Can chiropractors really get SBA loan guarantees?

Yes. It happens every day. To give you an example, here is information on chiropractors in Iowa who obtained SBA loan guarantees:

• 2005 — 16 chiropractors, for loans ranging from $18,000 to $375,000
• 2004 — 13 chiropractors, for loans ranging from $18,000 to $275,000
• 2003 — 16 chiropractors, for loans ranging from $25,000 to $325,000

And that’s just Iowa! If you want to see how many chiropractors in your state obtained SBA loan guarantees over the past few years, go to this Web site: www.sba.gov/loans/businessdetail/busloans05.html.

Q. Do I go to a bank first or to the SBA directly?

A. Typically you will go to several banks to discuss financing for your startup. Some banks will help you fill out the SBA paperwork; others prefer not to get involved with the SBA. You may also “pre-qualify” for an SBA guarantee. The best way to do this is to find a local Small Business Development Center at a local college or university and ask for their assistance in the pre-qualification process.

Q. What will I need in order to discuss SBA guarantees?

A. Like lenders, the SBA will require some information from you about your personal financial situation and your business.

• Your credit report and personal financial statement. The SBA will analyze your credit to determine your credit rating. The SBA will probably want you to fill out their personal financial statement form. Check the Resources page for this document and begin working on it before you meet with a lender or an SBA representative.

• Business profile and business plan, with financial statements. You will need to describe the business and prepare a business plan to back up your loan request. Financial statements showing cash flow and income are very important for showing the ability of the business to pay back the loan. For a startup practice, you won’t have past financial data, so you will need to include three year projections for cash flow and income.

• Loan request. You will need to describe the type of loan you want (term loan, line of credit), amount of the loan, and the purpose of the loan.

• Collateral. Even with an SBA guarantee, you will most likely have to contribute funds or pledge funds to the business. You’ll need to be prepared to describe your collateral, including any cash you will be providing, property or other assets that will be used, and other funds from co-signers or others that will be submitted.

Q. What kinds of SBA loan programs are available?

A. The most common loan guarantee program for small businesses is the 7(a) loan program. In this program, you apply to a lender for financing and the lender determines if your loan would benefit from an SBA guarantee. The SBA provides a guarantee to the lender (not to your business) that if you default on the loan, the lender will be reimbursed for some portion of its losses.

Q. What is the cost of an SBA guaranteed loan?

A. Typically, you will pay a guarantee fee of around 2 percent of the guaranteed amount. The lender may impose other fees on the loan to cover the cost of SBA paperwork.

Q. Are there SBA loan programs for women or minorities or other special groups?

A. These programs vary, depending on funding available. Check the Resources page for links to these pages.

Q. Where else can I obtain help?

A. Here are two organizations that provide assistance to small business owners, through the SBA:

• SCORE is the Service Corps of Retired Executives. They conduct workshops and provide individual assistance to help prepare business plans and apply for SBA loan guarantees. Their Web site is www.score.org.

• Small Business Development Centers (SBDC’s) are run through local colleges and universities to provide assistance to small business owners. Check the Resources for a map showing all SBDC locations.

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