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Start Up Loans by US Government

Old 06-04-2015, 10:36 AM
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Default Start Up Loans by US Government

I know there are lots of small business owners on this board, has anyone successfully started a small business (under 500K) loan without out 30% skin in the game? Always wanted to start something but just dont have the capital. I am guessing the SBA stuff would be a good place to start

Steve
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Old 06-04-2015, 10:39 AM
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I don't think it would be a good idea.. Start small and reinvest every dime for a few years, that's what it takes and you will be a whole lot prouder of your business that way.
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Old 06-04-2015, 10:43 AM
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the issue is with this type of business you really cant start small, you need to have the inventory, been doing it for 15 years now. Have been thinking about this for 5, first thing to go is the boat!

Steve
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Old 06-04-2015, 10:47 AM
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https://www.sba.gov/content/sba-loans

I know plenty of guys that have used SBA loans and/or other incubation methods.
The SBA loans are useful for buying equipment or other production related hard assets.
I don't believe they are allowed to be used as working capital (payroll etc).
You also are typically expected to assign your personal assets.

good luck...never hurts to stick a toe in the water.
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Old 06-04-2015, 10:57 AM
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yeah I am sure nothing will happen any time soon, just wondering what your guys experiences have been
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Old 06-04-2015, 11:08 AM
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Originally Posted by dimag333 View Post
the issue is with this type of business you really cant start small, you need to have the inventory, been doing it for 15 years now. Have been thinking about this for 5, first thing to go is the boat!

Steve
What type of business are you referring to? You mention inventory. Retail, Wholesale Distribution, Manufacturing?
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Old 06-04-2015, 11:11 AM
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retail and I would probably have some services (photography ect)
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Old 06-04-2015, 11:14 AM
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I bought my business 15 yeas ago... so things may have changed. Tried to go the SBA route but it was such a pain my own banker gave up on it and just lent me the money straight up... much easier at the time.
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Old 06-04-2015, 11:19 AM
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The SBA is good but they require personal Guarantees and all your assets, they make it sound good .But a lot of hoops to jump through.
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Old 06-04-2015, 02:53 PM
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I also believe that because the treasury backs it, it is like taxes can't get rid of it even in bankruptcy, also they can go into your bank account to settle.
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Old 06-04-2015, 03:10 PM
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Avoid SBA like the plague itself. If things go sideways on you there is no way out. Forever.
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Old 06-04-2015, 04:32 PM
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Personal banking sounds like the way to go
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Old 06-04-2015, 05:08 PM
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I know several persons including myself who tried SBA route but no luck. We could not give them enough info. and I finally gave up and went a different direction.
I'm sure SBA has worked for some but I don't know who.
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Old 06-04-2015, 05:33 PM
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I'd read this awhile back... where the SBA loans actually go... http://www.openthebooks.com/federal_...hy_lifestyle1/

Amid the $1 million SBA Wealthy Lifestyle loan recipients are:

- members-only country clubs

- high-end private clubs for yachting, skiing, shooting, surfing, & smoking cigars

- wineries- including those in Napa Valley and Sonoma, CA

- lodges and resorts in Jackson Hole, Cape Cod, Palm Beach, Lake Tahoe, etc.

- millions of dollars to high-end pet resorts

- exclusive Rolex and other up-scale, affluent jewelers

- Lamborghini and other luxury auto dealers

- aesthetic enhancement and plastic surgery clinics

- helicopter tour companies, BMW motorcycle dealers

- injury lawyers; artistic dental firms

- venture capital, mezzanine finance & private investment pools

- specialty entities including golf courses, marinas & more!

You want a loan, you gotta go posh (and be connected)!
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Old 06-04-2015, 05:56 PM
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I understand foundations can get all sorts of loans if the founders are unemployed and were broke when they left their last job. Particularly if the previous job was in a district near Virginia and Maryland.
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Old 06-04-2015, 06:31 PM
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Originally Posted by dimag333 View Post
the issue is with this type of business you really cant start small, you need to have the inventory, been doing it for 15 years now. Have been thinking about this for 5, first thing to go is the boat!

Steve
Grow it organically or you need to have capital. If you are under capitalized and unable to borrow money at ow rates your chances of success are low. If you are entering a business where there is competition and your margin is slim, borrowing money to build everything will make it very difficult. Most lenders will require you to have some assets or money down. The idea that you can get Uncle Sam to just give you money to start a business is a myth(if it's not then prove me wrong) unless you are connected.
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Old 06-05-2015, 03:42 AM
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Originally Posted by Reelintime View Post
... The idea that you can get Uncle Sam to just give you money to start a business is a myth(if it's not then prove me wrong) unless you are connected.
You are correct, at least about the startup part.
There are billions in SBA guaranteed loans made to everyday people.
Most are not what you would consider "start-up" loans.

It is much more common to get financing for a specific item that serves as collateral, and then provide double-collateral with your personal assets.
Hell...I knew a guy who got an SBA loan for a food truck...but it wasn't startup.
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Old 06-05-2015, 04:04 AM
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Try SBA (as a last resort), but as others have stated, a "start-up" is very hard to finance.

Couple things:
-Look into "Angel Investors"
-If dealing in inventory, contact suppliers/wholesales - they may provide some initial inventory against future sales. Manufacturers sometimes give them "discretionary" allowances.
-Look into partnering up with someone already established but needs something you can provide
-On a start-up friends, family, business contacts are your best bet
-Your credit needs will most likely be based on your personal credit history versus the business for several years if you are starting the business from scratch.

Many people think "Small Business" is Mom & Pop type businesses - IMO it is not. When it comes to financing, small business is generally much bigger than most people think, meaning 10 - 20 million in annual revenues and under 250 employees, give or take. Below that, it's a Micro business.
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