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SBA loans, or Small Business Association loans, are loans guaranteed by the government to private institutions with the charge of helping start-up or expanding small businesses get needed capital. SBA loans have been used my millions of businesses nationwide as an alternative to regular bank financing, or other asset backed loan instruments. The distinction to remember is that SBA loans are not loans from the Small Business Association to you directly, you will be borrowing from a private institution, but that institution is backed by the government in case you default. Business expert Phillip Thow suggests looking at SBA loans as primary financing, and as a way to establish business credit.
Unless you are a millionaire with cash to burn and you want to get into business, you know it is extremely hard to get a bank to take you seriously, especially in these economic times. It seems no matter how fabulous and well researched your business plan is that the bank rejections just keep coming. So, who is going to help you? Well, unless you have a rich dotty old aunt somewhere, your best bet just may be taking advantage of SBA loans. You will still have to go through the same due diligence dance you had to for the banks, but SBA loans programs are much more forgiving and liberal Phillip Thow says.
Maybe you have a business and need to expand. SBA loans can help you with that as well. The SBA’s charge is to help foster business growth, especially in tough times when bank financing has dried up for all but the wealthy and solvent few. Banks will want you to put up personal collateral like homes and property, by looking at SBA loans you avoid that mentality as the government will back the bank issuing the note. They help to spread the risk and take it from being entirely on you alone, something Phillip Thow definitely supports.
So, according to Phillip Thow, unless you’re hoarding cash under your mattress, have a bunch of rare baseball cards to sell, or your sister in law is in the bank business, it may be a prudent idea to check SBA loans as an alternative to traditional financing. The SBA is committed to growing businesses whether you are just starting out, or are ready to go to the next level. Phillip Thow believes in that ideal as well and supports the idea of using SBA loans for business. Asset protection is another key item to obtain which will be discussed in another article.
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