Small Business Boomers

Boomers: How to package your small business loan request

by Jean on June 28th, 2008

In my last post today, I talked about a new course from the SBA describing the types of loans they have available.  Here is the second new course from the SBA.

The second one, How to Package a Loan Request,  discusses the requirements for putting together a loan.

It also includes a list of “realities” about small business loans that is worth noting:

Reality 1:  There is 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 better 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 is 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 can 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.

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POSTED IN: Business Improvements, Business Plan, Small Business Loans for Boomers, Small Business finance and taxes, Starting Up