My business is poised to grow, possibly significantly, and I am very fortunate to have found a source of private capital. I've been reading all these postings trying to learn about the process of getting bank funding - possibly SBA secured. And, I'm just being honest here, if the government is trying to help, then they are really missing the boat. Small and micro business, if nurtured, will grow and create jobs. When one reads all these postings, the theme is clear and consistent.
1) If you have no profitable record, use the 'bootstrap' and borrow on your own credit cards, 2nd mortgage, friends/family, etc.
2) If you have a profitable record, go to the bank but the bank wants you to personally have the ability to pay, have cash flow and collateral assets.
If either of those options is viable - why do I need SBA? If I personally have the ability to repay the loan, the bank will lend it to me to buy a boat, go to Costa Rica or start a business - they don't care, as long as I can personally repay it.
The gap - and you can see this gap in any number of postings on this board - is those individuals wanting to build a business that have already blown their own credit rating (bootstaps) or who don't have a full time job. I saw one response to a business owner that said 'why don't you go get a part time job to finance your business' ???????
I won't rant (for too long) as to how our government sat by idly (thank you SEC) and watched our big financial institutions bet billions on really bad ideas that did not create any sustainable employment.
What I believe the government needs to do, and the SBA is probably the right place to do it; is to create a program that guarantees the loans that banks make to LLC's, s-corps and the like that is based on the business, its' viability and its' potential for employment and NOT on the personal resources of the owner. If we did this and somehow the big bankers came along for the ride, we would hasten the end of the recession, start a major uptick in employment and rapidly grow the GDP. Yes, there would be larger losses in the SBA account, but maybe we could sell off a little piece of GM (Government Motors) to cover the bill.
Great opinion piece! You have it right - if you don't need money - you can get all you want.
Problem - if starting and growing a business was easy - ever one in this nation would be a small business onwer. It is not easy. That is why entreprenerialship is risk taking.
Regarding having someone have a full-time or part-time job while starting their business - when you cannot get money any other way - what other choice is there? No job and no business - seems even worse then job and part-time business.
SBA guarantee loans are great for those 'nearly qualified' borrowers that are on the fence. You might not have enough collateral to please the bank by itself - but, the SBA guarantee may push it over the fence in your favor. Or, if your business is a service business without collateral - the SBA may help entice the lender to approve the loan. - Great for franchising as well.
SBA loans are not last ditch choices but helping hands for those businesses that are very close to being approved.
I agree that the SBA or small business lending in this copuntry needs to approve - but I am not sure your idea would be the best. I like the fact that there is a personal guarantee componet to a loan - it means that borrowers will work harder and not give up so easily - in the end, it means better businesses. Plus, if someone cannot pay their personal bills - why would a bank trust them to pay a business loan? - Look what happen when banks looked the other way in the residential mortgage market - I don't want to see that again.
What I would rather see is people (business onwers or not) taking financial care (responsibility) of themselves. Thus, when it does come time to obtain a loan - they will not have these types of trouble. Take care of your credit - keep your debt levels low and in line with your income (means quit overspending).
Then, when you really need money to something good - you will be prepared!
I agree with some of the points made here but I think it's worth pointing out that grading the long term health or the fundamentals of a business plan is a lot like a beauty contest with a large subjective component (especially if the business is less than 1 year old). I think it's also worth noting that many successful business people I know failed or had to fold up a business or two along the way. Happens to the best of them. I understand Trump's casinos are in trouble again.
los angeles intellectual property lawyer
los angeles county intellectual property attorney
I agree with some of the points made here but I think it's worth pointing out that grading the long term health or the fundamentals of a business plan is a lot like a beauty contest with a large subjective component (especially if the business is less than 1 year old). I think it's also worth noting that many successful business people I know failed or had to fold up a business or two along the way. Happens to the best of them. I understand Trump's casinos are in trouble again.
los angeles intellectual property lawyer
los angeles county intellectual property attorney
Great opinion piece! You have it right - if you don't need money - you can get all you want.
Problem - if starting and growing a business was easy - ever one in this nation would be a small business onwer. It is not easy. That is why entreprenerialship is risk taking.
Regarding having someone have a full-time or part-time job while starting their business - when you cannot get money any other way - what other choice is there? No job and no business - seems even worse then job and part-time business.
SBA guarantee loans are great for those 'nearly qualified' borrowers that are on the fence. You might not have enough collateral to please the bank by itself - but, the SBA guarantee may push it over the fence in your favor. Or, if your business is a service business without collateral - the SBA may help entice the lender to approve the loan. - Great for franchising as well.
SBA loans are not last ditch choices but helping hands for those businesses that are very close to being approved.
I agree that the SBA or small business lending in this copuntry needs to approve - but I am not sure your idea would be the best. I like the fact that there is a personal guarantee componet to a loan - it means that borrowers will work harder and not give up so easily - in the end, it means better businesses. Plus, if someone cannot pay their personal bills - why would a bank trust them to pay a business loan? - Look what happen when banks looked the other way in the residential mortgage market - I don't want to see that again.
What I would rather see is people (business onwers or not) taking financial care (responsibility) of themselves. Thus, when it does come time to obtain a loan - they will not have these types of trouble. Take care of your credit - keep your debt levels low and in line with your income (means quit overspending).
Then, when you really need money to something good - you will be prepared!
phanio | Contributor | 1/18/2011 - 8:45 am
sbbarca | Contributor | 3/23/2010 - 4:52 am
sbbarca | Contributor | 6/20/2009 - 7:46 pm
phanio | Contributor | 3/23/2010 - 4:52 am
Join The Discussion
You must be logged in to join the discussion. If you already have an SBA Community account, Log In to join the discussion.
New users, Register for a new account and join the conversation today!