Loans that are backed by the United States Small Business Administration offer many features that entrepreneurs in Ohio may find very attractive. There are a wide selection of loan options, smaller down payments, competitive rates and terms, longer repayment periods and guardrails for going through the loan process. However, it is important that small business owners do their research and understand exactly how SBA loans work.

Almost any type of business that is in operation and provides a service or product can apply for an SBA loan. The money is not directly loaned by the SBA to small businesses; the only way a business can obtain such a loan is by going through an approved lender. The SBA serves as a guarantor for the loans and establishes guidelines, two factors that lower risk for the lenders.

One eligibility requirement for applying for an SBA loan is having a for-profit enterprise that is in operation in the United States or any of its territories. The owner must also invest some equity in the business.

SBA loans are issued in amounts that range from as low as $500 to as high as $5.5 million. The funds can be applied to almost any type of business purposes, such as buying equipment and real estate, being used as working capital or funding ownership transitions.

The loans that are backed by the SBA generally have competitive rates and fees. Some of the loans also offer additional benefits, such as flexible overhead requirements, education, no collateral and counseling.

A business law attorney may work to protect the interests and rights of a business owner as they secure small business financing. Legal counsel could advocate on behalf of the client during loan negotiations and review loan contract terms.