Forums: Discussions for entrepreneurs and small business.

I am going to be going for a SBA loan this year and would like to hear some Success/Failure stories.
I don`t know what I am in for and would like also to know how the process goes.
My whole business depends on this funding.

Thanks,

Walter

I went for an SBA loan with a startup business plan.  Because I had already invested over $50,000 in startup costs and had written them off (LLC), I had negative equity.  They will not lend on negative equity. FYI

 

 

Walter,

A couple of quick comments

1. SBA loan guarantee programs are not homogeneous. Each lender will have their own requirements and preferences in addition to the SBA.
2. Having your “whole business” depend upon receiving the SBA loan is stressful.

Consider engaging the services of someone who can help you prepare for and go through the process while considering alternatives.

 

I can give you a good contact – just send me a private message or contact me at robert@bizgrowthmasters.com

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

Tried the SBA loan, and banks wanted Collateral at the same amount asking. However, we did come across companies willing to do the SBA loan, but with higher upfront fees. We said NO. We got creative.  

We got creative as.....?

We started raising the funds online ourselves. Think about how you could raise money for your company. One your website, two what does everyone need, and three a group effort.

Just be aware that raising capital by selling unregistered securities via the internet may be "frowned" upon by the SEC and your State.

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

robertj, you make a good point.  I`ve read much about Reg. D and proper solicitation of capital.  My guess is that most seed money is not obtained "by the book".  At what point will this become a problem?  And how easy/hard is it to resolve?  My gut tells me that if "big money" is coming in they will want everything worked out and fixed prior to any such investment. 

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Travis Tschepen
Hibachi Bros. LLC

--My goal in life is to be as good of a person my dog already thinks I am.--

MnGrillGuy,

I suspect your guess is accurate – that much of the early capital raising is “creative” and depends upon what I call the “good news” exemption. By that I mean that I mean that no one seems to object as long as things are going well.  However, the authorities seem to be looking for those companies that are using the Internet for public solicitation of their offering.

 

I’m aware of a company in California that was given a rescission order –which means “give all the money back to the investors”. While this can be very annoying, by far the most common result is that later round investors (professional angels and VC firms) will “run” from these types of risks. I’m aware of several small VC firms that really wanted to invest in a company – but just “couldn’t because of the risks created by earlier “creative” capital acquisition. 

 

Also, remember that such “creativity” may be viewed by those investors as a “ behavior pattern” and thus an indication of future actions.

 

While I fully understand the “crunch” of severely limited cash, I do suggest that laying a strong foundation for your business is a good long-term investment. I’m not suggesting that you have to spend $25,000 - $50,000 to properly raise some first capita, either.

 

One can begin with small steps while laying strong foundation and preparing for the next round. In fact, we`ve seen many other benefits from this approach.

 

 

 

 

 

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

I have to add my voice to robertj`s, tread carefully in securities issuance waters. 

One of my consulting clients did the SBA route (against my advice) with CIT and it`s killing her business slowly.  The busines was a franchise that put up some impressive fantasy numbers about what could be made.  If she did not have the SBA loan, she might be able to pay herself a salary someday, but will not be anytime soon.  We had hurricanes here in S. FL and the triple net lease pass thrus here are killers.

What I am trying to say (other than don`t get into a franchise unless you are sure it will work) is do not go into debt with them if you can at all help it.  Look to some of your local finance people, there are angel investors who would rather bankroll new businesses than gamble with their money.  They are kind of tough to find and will require the same disciplined business plan that the SBA will.  Less red tape with them though, they make decisions and act much more quickly. 

Have a lawyer review any private loan documents drawn up, and DO NOT use thier lawyer or anyone they recommend.  Pay the fee to a lawyer so you can sleep well at night.

Good luck.

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Dale
www.ourbestidea.com
www.maskerinsurance.com
www.maskercreations.net