A couple of people took exception to my recent posting regarding the availability of government grants for starting a small business. Some of the comments were just people ranting without any facts, but some made a decent point. However, the most common think cited by email-ers was the Small Business Administration’s loan program. This is, of course, a completely different animal, but, one that merits a bit of discussion.
The SBA has tons of different loan programs, but its main one that people are most familiar with is the 7(a) loan program. As luck would have it, BusinessWeek published an article on the SBA loan program earlier this year. I think it merits reading for those of you counting on this route. The article notes an 18% downturn in the number of loans issued. Keep in mind, that this was written BEFORE the current credit crisis came into play.
SBA Loan Program Information
Ok, now that you have some current events background, let’s jump right in.
The Small Business Administration does not give out loans for small businesses. Anyone who says differently is trying to sell you something, or misinformed, either way, get your info somewhere else.
The SBA actually guarantees certain loans to small businesses. Those loans are actually made by banks who set the terms, approve the loans, and collect on the payments. The only way the SBS gets involved is if the loan is defaulted on (not paid back), in which case, the bank that made the loan may go to the SBA to get its money back.
Before you pay anyone money to give you the “inside track” on small business loans or do anything else for your business, do yourself a favor and take the SBA Free Online Course: Guide to SBA’s Loan Guaranty Programs. This program is free and it is right from the horse’s mouth, so to speak. Knowing the basics up front can save you a lot of money and heartache down the road.
Now, don’t take me the wrong way. I am not discouraging anyone from starting a small business, and I am not saying that you should not apply for grants and loans and any other form of assistance you can find. What I am saying, is do some research FIRST. In other words, look up the SBA and what it does BEFORE you post a gig on Guru.com seeking someone to help you apply for a Small Business Administration Grant (sic) because your small business will have a woman owner.
Then, you won’t have to worry about wasting all of that time and money.