What are government loans?

Government loans are either loans made directly by the federal government or loans backed by a guarantee from an agency within the federal government. These loans can cover a multitude of purposes including purchasing a new home, getting an education, starting a new business, or recovering from a disaster. Many of these loans come with much lower interest rates and terms that are more flexible than similar loans available exclusively in the private sector. The individual or business has a legal obligation to repay the loans according to the terms of the contract.

Recent published funding opportunities: (Last updated: 2022-09-25)


Apply for Grants


Who is it for?

Individuals, business, non-profit groups, and other government agencies have access to government loans of different types. The loan programs available are quite numerous and cover a wide range of options. Agriculture loans make funds available for helping farmers and farming companies build and maintain their facilities. Business loans help individuals build small businesses by providing startup funding. Disaster relief loans provide funds to individuals and businesses in designated disaster areas. Education loans help students meet the costs of higher education. Housing loans provide guarantees that help people buy, build, repair, and rehabilitate housing. Veteran loans are there to help active and retired members of the military with different types of funding needs.

Who is eligible?

Each of the programs for government loans has its own eligibility requirements. Some programs are only available to individuals while others have options for businesses or farms. For example, the 7(a) Small Business Loan is available through the Small Business Administration. Those that qualify for the program must meet the SBA's size requirements, have the ability to repay the loan, must be in business to make a profit, and cannot have sufficient assets to provide financing outside the SBA. Businesses which are too big or have too many assets would not qualify for such a loan. The best way to determine eligibility is to examine each program's requirements.

Education loans are the most common of the government loans available to individuals. These loans are available to many students depending on their economic situation. For those that meet certain financial guidelines, they may qualify for subsidized loans which defers the interest accumulation until after the student graduates or leaves school. Other loans are available to those that do not meet the financial guidelines. Those loans are not typically subsidized and the interest starts accumulating from the day the money went to the student. Parents can also take out loans to pay for their child's education.

Housing loans are another category of government loans available to individuals. Most everyone can qualify for a FHA loan at some point. The FHA requires borrowers to meet minimum credit and income qualifications. These are usually significantly lower than those required for purely private loans are. The borrowers also need to have 3.5% down payment for the home in question. These loans are available to individuals buying their first home or those refinancing an existing home mortgage who meet certain requirements. Due to the multitude of programs available, visit the FHA website for more details.

Disaster relief loans are a different issue altogether. In order to qualify, your home or business must be located within a declared disaster area. That is an area designated by the state as devastated by a disaster like an earthquake, tornado, tsunami, drought, or similar circumstances. The first step individuals and businesses alike must take is to try to recover financially through private means like insurance policies. Only after exhausting those routes can the loans become available. The individual or business will need to show they have the means to pay the loan back in a timely fashion as well.

How to apply for Government Loans?

As with eligibility, each program that offers government loans requires a different application process. For those loans handled by private lenders, the process is very similar to what the lenders require from all borrowers. The applicant provides a full application to the lender outlining what they intend to use the money for and how they intend to repay it. They provide permission for the lender to pull appropriate credit information and to contact creditors and other parties to verify the information. For some loan programs, the applicant may also have to provide additional information or sign additional forms for the lender.

After the applicant provides the lender with application and other information, the lender takes it from there. The lender will need to do the normal credit and income verification process for these government loans. However, in addition, they also have to provide certain information to the appropriate agency. The agency will review the application to make sure the applicant qualifies for the program. This additional review can add a couple of weeks to some loan application processes. If the agency approves the loan, it goes back to the lender. In the case of a private lender, the lender can decline the loan application even if the government agency approves it.

For government loans for education, the process is a bit different. The student must fill out the Free Application for Federal Student Aid. The student provides financial information that the Department of Education uses to determine eligibility for loans. If the student is dependent on parents, the financial information is on the student and the parents. If the student is independent, the financial information is on the student only. The Department of Education issues the Student Aid Report that outlines what federal financial aid for which the student qualifies. That will contain information on the loans.

For disaster relief government loans, the applications generally go through the Small Business Administration. When an area becomes a designated disaster area, the SBA often sets up offices in the area to help individuals and businesses get loans. The process requires the applicant to put in either a manual or electronic application form. The SBA reviews the application and determines if the individual or business can pay the funds back. If so, then the applicant receives the funds after signing appropriate loan papers.

For more information on these and other government loans, visit the following websites:


Grant application guides and resources

It is always free to apply for government grants. However the process may be very complex depending on the funding opportunity you are applying for. Let us help you!

Apply for Grants