In my last post today, I talked about a new course from the SBA describing the types of loans they have available. Here’s the second new course from the SBA.
The second one, How to Package a Loan Request, discusses the stipulations for putting together a loan.
It also includes a list of “realities” about small business loans that is worth noting:
Reality 1: There’s no such thing as 100% financing. You will be required to put something into the business, sometimes “sweat equity,” but usually cash.
Reality 2: Your credit history is important. If you have a great credit history- 650 and above - you have a superior chance of getting a loan than if your credit is poor.
Reality 3: The lender (i.e., bank) will probably require your personal guarantee. There’s almost no way around it, so if you’re not prepared to do this, don’t get the loan. In my experience, it doesn’t matter if you set up the business as a corporation or LLC to try to minimize your liability, the personal guarantee will still require you to pay back the loan if the business doesn’t succeed.
Reality 4: There are no government grants available for profit-making businesses. Don’t let scam artists tell you they have the ability to help you get a government grant; they can’t. There aren’t any.
Reality 5: The SBA does not lend money. The SBA provides a guarantee to the lender for a percentage of the loan (75% to 85%, depending on the type of loan and amount), so if you default, the bank gets at least some of its money back.
I am always happy to answer questions (this is what I do for a living), as long as you recognize that I’m not an attorney or CPA, and I don’t give financial, tax, or legal advice.
Tags: baby boomers, business loans, Small Business Administration, small businesses
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