Board Topic: SBA Loans and equity
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SBA Loans

Posted by: panagon Nov 15 2004, 09:47 PM
I voted NO because not every great start-up entrepreneur is rich enough to secure even 10% of what a major business loan is worth. I do not think putting up money for a loan shows how much you are willing to give forth to your project (especially if you don't have the money to do so). I believe it's how strong your passion for actually conducting your own business is, not just about how much money you could potentially make.

Im 100% sure that Bill Gates (richest man in world), founder of Microsoft, and Michael Dell (one of the top 10 most richest persons in the world), founder of Dell Computers wouldn't have been able to secure an SBA loan at the age and financial situation they were in at the time they started.

After all, besides the fact of the pure passion of owning/running a business, isn't the grand reward of making money a great decision factor in starting your own company?

Posted by: loanuniverse Nov 16 2004, 12:30 AM
The equity contribution money is for the benefit of the lender. There is a time for equity and a time for debt. You are asking the lender to assume too much risk without sharing on the upside potential of the equity investor.

There are few other countries were creating your own business is easier. Maybe there isnít one. Those two names you mentioned are part of the support for a lenderís argument. Take a look at those companies balance sheets now and you will find debt. Back when Dell was selling newspaper subscriptions to buy his first BMW there was no way he was going to get a loan, but his company enjoys the benefits of borrowing now.

Posted by: Commercial Lender Nov 26 2004, 12:14 AM
SBA has two tiers of underwriters. Unless you have some gift crucial to the business i.e your special sauce etc you will have to show some BSE (Blood, Sweat or Equity).

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