Why SBA Loans Differ from Conventional Loans

Three Brothers Bakery was founded by four people who endured the Holocaust, and has since survived four floods, a hurricane and a fire in recent years. Janice Jucker, a co-owner of the Houston-based bakery, said Three Brothers wouldn't exist without the Small Business Administration (SBA).

"Our story is one of survival, and part of that survival has been the SBA loan program," she said.

The company received two disaster-relief loans and recently got approved for a 7(a) loan through a local bank's SBA program. The relief loans bridged the company until its insurance payments kicked in, and the 7(a) loan is going to build the business a new location on higher ground.

There's a loan out there for every type of business, even those that don't have the track record or credit to get approved from a conventional bank. The SBA makes sure of this, incentivizing conventional lenders to provide funds through its 7(a) and 504 loan programs to businesses that otherwise would have been rejected.