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KristineS
08-18-2008, 07:48 PM
Did anyone use a government grant or loan to finance their business? I've heard there's a lot of bureaucracy involved in obtaining one of these loans. I'm wondering if that's true.

vangogh
08-18-2008, 08:09 PM
I took a shallow look at them originally, but they seemed to be more of a pain to get than anything else. I figured I would save the hassle and not worry about it.

orion_joel
08-19-2008, 01:49 AM
I have read one or two things, about this sort of financing that basically said for all the talk about them. They really do not exist to the extent you are lead to believe. While i do believe that many governments offer grants or low interest/no interest loans in natural disaster area's to help business get back on their feet and rebuild the area, i did not really think they were done as a general course of practice.

DannySantos
08-19-2008, 04:29 AM
Well firstly you should note that I am in a little country called England, not America as a lot of you seem to be :)

And I did apply for government funding but was rejected - this was due to the fact that they didn't think we had asked for enough, and weren't prepared to pay what they suggested we needed (lol)

However, funding aside they were incredibly helpful with tips and advice, and very generous with their contacts. If for no other reason, it is good to set up a relationship with these organisations for that

Of course, I'm not too sure how different they are in other countries

vangogh
08-19-2008, 12:17 PM
This is definitely one of those country specific questions. Here it just seemed like more promise than anything real. I'm sure there are some people who do get grants that help them, but when I first looked it just didn't seem worth it to me. I had the feeling I would spend a lot researching and applying without getting much or anything in return.

KristineS
08-19-2008, 08:42 PM
I'm not sure how such things work in other countries. It would be interesting to find out if the experience and help differs depending on the country your in. From what Danny says, his experience differed from what I have heard is the norm in America. Sounds like he may not have got funding but he did get help and information.

DannySantos
08-20-2008, 04:11 AM
I'm not sure how such things work in other countries. It would be interesting to find out if the experience and help differs depending on the country your in. From what Danny says, his experience differed from what I have heard is the norm in America. Sounds like he may not have got funding but he did get help and information.

Thats right, and I know many people who have actually recieved the funding in Britain too - we have two major companies and a few others that offer it, one being Business Link (which is the one I dealt with) and another is the Princes Trust, which was set up by Prince Charles to help businesses develop. The second don't really offer grants but do offer very low interest loans to help you out

vangogh
08-20-2008, 11:28 AM
It's always struck me that we don't do enough here in the U.S. to help small businesses get started and grow. The majority of people employed here are employed by small businesses and you'd think there would be more incentive to help.

I know there are sources of funding available and I also know that you can't just hand out money to anyone who says there's a small business, but I think we could do more here to help the process of getting a business started.

KristineS
08-20-2008, 12:10 PM
I have to agree with you Vangogh. When I saw Danny's last post, my first thought is that America is supposed to be the land of opportunity and small businesses are clearly a route of opportunity. It seems like we could be doing more to help small business people.

DannySantos
08-20-2008, 12:10 PM
I agree, at the end of the day, businesses will provide growth for the economy so it makes sense for the government to help out a little

Ad-Vice_Man
08-26-2008, 04:24 PM
The SBA does have some interesting loan products... but they are what's called "loans of last resort". They do tend to be more paperwork heavy and "detail oriented" but they are available... The Place many people get frustrated is that the SBA doesn't directly lend to individual businesses so you have to go to a credit union or bank that does SBA loans.

What I hadn't realized but think is very cool is that the SBA has a loan program to buy commercial realestate. If you wanted to buy the property for your store/office you only need to come up with 10% which is often within the reach of a small business... plus just like residential real estate... owning is cheaper than renting in the long term.

KristineS
08-26-2008, 05:44 PM
What I hadn't realized but think is very cool is that the SBA has a loan program to buy commercial realestate. If you wanted to buy the property for your store/office you only need to come up with 10% which is often within the reach of a small business... plus just like residential real estate... owning is cheaper than renting in the long term.

I didn't know about that program. You're right, coming up with that amount in order to buy a building would be doable for a lot of small businesses.

Business Attorney
08-26-2008, 06:50 PM
I have a couple of clients who would not own their businesses today if they had not been able to get SBA-backed loans to finance their acquisition.

It is true that there is paperwork, seemingly arcane rules and other hurdles, but banks will often make an SBA loan in cases where they would not have made a direct loan.

For someone with established credit who just shopping for the cheapest financing available, then an SBA loan is probably not your ticket. On the other hand, for someone who has a good opportunity to buy a business but lacks the capital most banks would want to see, the SBA loan program is something to look at.

Ad-Vice_Man
08-27-2008, 10:31 AM
For someone with established credit who just shopping for the cheapest financing available, then an SBA loan is probably not your ticket. On the other hand, for someone who has a good opportunity to buy a business but lacks the capital most banks would want to see, the SBA loan program is something to look at.

You're absolutely right... the interest rates on SBA loans aren't at all competitive BUT... they will lend you money for a well thought out business (gotta have a business plan) And there rates are still better than Credit Cards.

The other nice thing about the SBA loan is that they won't allow the Credit Union/Bank to impose a pre-payment penalty... so you can start out with an SBA Loan when you're just getting started and then re-finance it when the business is more established... at better terms.

Ad-Vice_Man
08-27-2008, 10:35 AM
Speaking of interest rates... one area where especially small business owners get hung up.. especially now.. is they see Mortgage rates in the 6% range which is historically VERY low... Mortgages as little as 10-20 years ago where in the double digits. SO the 8,9,10% Business loan interest rates seem high now, but in the past they seemed low.

In case you're wondering... the rates for mortgages are calculated differently than for business and other loans... which is why you sometimes see the fed reduce the "prime rate" but mortgage rates either stay the same or increase.

Dan Furman
09-02-2008, 08:13 PM
I think America does plenty to help small businesses - mainly by staying out of the way. Prettymuch anyone anywhere can start a business anytime they like.

IMHO, almost any responsible adult who has a decent credit history has access to enough credit to get a reasonable small business going. And like I mentioned a few times, I think a little personal risk is good for business, anyway. I'd rather someone risk their own money than risk mine (which is what funding would be in a roundabout way.)

ParisCreative
09-04-2008, 02:30 PM
I agree that there should be some personal risk/reward as Dan Furman suggests, but it still is quite difficult to start on your own especially in this economy.

I have had a pair of attempts to start on my own, once in 2001 and once in 2007. Both times utterly failed because I could not put enough time into those projects to grow, both because of the financial obligations I had that required me to still work full time.

It's a catch-22 at times.

cbscreative
09-04-2008, 03:21 PM
As I reead through this thread, I kept wondering if anyone was going to say something similar to what Dan said. Kudos, Dan. I agree that the best way to help business is to stay out of the way. Yes, things like SBA loans which are not coming out of taxpayer pockets are good, and I don't mind seeing programs like this at all.

However, and this problem is not easily solved, the best thing that would help business is for politicians to quit hiding tax hikes from the public by imposing them on business. Much of our offshore problem is not the result of "evil" or "greedy" corporations looking to save a buck, it's often because these companies are motivated by tax penalties if they operate within our borders. Much of the money that leaves the US leaks out just to avoid taxes.

I don't really watch Glenn Beck, so I'm not quoting him as a fan, but I did hear him say something that sums it up perfectly. It went something like this, "When I write out a check to a charity, I feel good about giving that money away. When I write the check to the IRS, I feel like I've been royally screwed."

What's great about our country is the willingness of people to help those in need. We don't need a government acting as a charity. That is not their purpose, and they're not very good at it anyway. Charities and churches are much more effiecient and don't waste money to the degree our government does.

vangogh
09-04-2008, 04:05 PM
I wouldn't advocate that the government simply hand out money to anyone wanting a small business, but I do think they could do more to help, given that small businesses provide the majority of jobs in this country. Those same small businesses spend most of the money that keeps the economy going.

Seems to me like large corporations get more tax breaks and help than most of us small businesses.

Again I'm not suggesting the gov't just give away money, but I think there could be more programs to help out people wanting to start a new business assuming they meet certain requirements. Maybe the programs are there and I just don't know about them.

cbscreative
09-04-2008, 04:16 PM
Seems to me like large corporations get more tax breaks and help than most of us small businesses.
At the risk of sounding cynical, it's because we don't have lobbyists.

vangogh
09-04-2008, 04:19 PM
You're probably right. Plus we each don't contribute quite as much to any candidate's campaign individually.

Ad-Vice_Man
09-05-2008, 09:34 AM
Actually, many local (not federal) governments have programs to help start ups... In the area I live, the county government has set up business incubators which allow start up companies to have office space /lab space for free or cheap to get off the ground. The local governments are the most interested in helping local business because it improves the local tax base.... The fed doesn't, and in my opinion shouldn't care about small business... this is a state and local matter and should be handled by the local governments.

Dan Furman
09-05-2008, 11:01 AM
See, here's my problem with programs/funding as we're discussing them: it's fine to say that government should help small business, because that's who creates jobs, etc etc.

But, in my opinion, the biggest roadblock to most small businesses is what Paris touched on - living expenses. I mean, let's be honest here: in general terms, when small business financing (etc) is discussed in places like this, it's not about buying a building, buying a fleet of cars, buying a franchise, etc etc. It's about paying the bills while they work on the business. It's about buying a computer, etc. Small stuff.

It might be a little hard-hearted of me, but I do not think funding should be used for that on the small scale that we are talking about. If you want to start, say, a local B2B IT services business (one where you need to quit your job so you are available business hours), your living expenses should come from savings and credit. And if those two are not available, it would be fair to at least question your business acumen in the first place. Not saying it would be bad, but if you don't have any credit in "life", how can you expect to run a business?

I can also understand if someone who has the credit and savings doesn't want to do that, either, especially if they have a family. But then, in my mind, business should probably remain a dream for them.

Again, hard-hearted, but perfectly reasonable (imho.)

KristineS
09-05-2008, 11:09 AM
I don't necessarily think you're being hard hearted Dan, just realistic.

You're right, for some people owning their own business might be an unacceptable risk. There's nothing wrong with that, as long as you are able to analyze the costs and benefits and make an informed decision. Ultimately the success or failure of your business rests on you, so the responsibility for keeping yourself afloat should rest on you too.

vangogh
09-05-2008, 11:23 AM
Dan I don't think you're being hard either. I agree for many small businesses it's the living expenses too.

I guess what I mean is I'd prefer to see some tax breaks favor small business instead of large corporations. I'm not sure what would be the right tax, but the system at the moment seems like it overly favors larger companies.

I also know there are loans available through organizations like SBA, but they're still just loans given out by banks and they generally work the same way most business loans work. You get it once you prove you don't need it. Maybe the requirements for loans could be relaxed a little. Not to the point where anyone who wants one gets one, but maybe it's less about the collateral and more about something you can show with your business plan.

Seems like there should be something to help those people you know have what it takes to make it to get started.

Again I'm not advocating just giving money to small businesses. I think if that happened you'd find a lot of people leaving jobs and calling themselves small businesses. But there are people who might not have the money to start (even if that money is for living expenses) that you can tell are going to get somewhere. Just think about people who pop into forums talking about starting a new business. Without mentioning names there are some you can tell are ready to be in business for themselves and others who you can pretty much tell will be looking for a job again in a month or two.

cbscreative
09-05-2008, 11:39 AM
I don't consider that hard hearted either, Dan. I say this as someone who grew up basiclly poor, and never had things handed to me. At the time, I resented how easy it seemed for some. While my peers were getting things like cars for a graduation gift, I had to work the entire summer to save money to buy my first car. The job sucked, and the car was 10 years old. Back then, 10 year old cars were pretty much toast.

My perspective now is different. While I would have liked to have had someone making things easier for me, I now see the value of having to earn it myself. Our culture seems to value sugar daddies to the point where many people have no idea what struggle really is.

There are many perspectives on what went wrong in the 1960's. Here's one I believe to be true. The parents of the 60's generation were a product of the Depression and WWII. These people knew difficulty and pain and hell. They understandably did not want their children to ever have to endure that. The result was that they put so much effort into protecting their children that many of them had nothing better to do than smoke pot and rebel against the system.

Now I may be the one sounding harsh, but there is no substitute for fighting your way to the top and being self made. The idea of getting help may be popular, but it often shelters people from personal responsibility. I'm not against a "hand up" but I think that "handouts" do more harm than good.

Dan Furman
09-05-2008, 11:43 AM
Dan I don't think you're being hard either. I agree for many small businesses it's the living expenses too.

I guess what I mean is I'd prefer to see some tax breaks favor small business instead of large corporations. I'm not sure what would be the right tax, but the system at the moment seems like it overly favors larger companies.


That's not quite true - I've done a ton of writing this year about section 179, and it's a major tax break aimed at small and medium sized businesses (and phases out for large ones). In a nutshell, it allows you to deduct the full purchase price of equipment in the current tax year. It's not new (it's known as "the hummer tax break"), but the limits were greatly expanded this year with the Economic Stimulus Act of 2008.

Section 179 Tax Deductions for 2008 and 2007 | Section179.org (http://www.section179.org)

vangogh
09-05-2008, 01:10 PM
It could be more me looking at this as it related to my business than anything else. I'm certainly not an expert on taxes at all.

A tax on the purchase price of equipment is great, but for someone like me it's often better in theory than practice, because my equipment needs are minimal. Again that's me and not all small businesses. Obviously some would make greater use of section 179 than I would. And it's not to say I can't make use of it either. I'm always happy to purchase a tax deductible computer.

Thank you for pointing out the tax deduction by the way.

I do know there are tax breaks and incentives and again I'm probably looking at this more from my own experience and perspective. In my current business I wasn't looking for any help in the way of finances. I've been happy to finance everything myself even if that meant some months with a lot of struggle early on.

Prior to this business I tried starting a similar business with a friend. Admittedly in the beginning what we needed most was living expense money. A few things to invest in like better computers and software would have been nice, but mostly what we needed was to cover personal expenses and marketing. Maybe we just didn't find it, but there didn't seem to be much to help us get going.

Now I can understanding tax payers not wanting to pay our bills for a few months. I wouldn't have expected or wanted anyone to hand us money. I remember talking to a bank in regards to an SBA loan and we were basically told to there was no chance of us getting a loan. We were hardly looking for a lot either.

Now maybe we wouldn't have been good a risk under any circumstances at that time. I'm not at all suggesting we should have gotten a loan simply because we asked for one. But I could see how there might have been programs that would have helped us put together a realistic plan for starting our business, made us more aware of some things we'd need to do, etc. Maybe assuming we could show that we had absorbed all that was taught to us it could have tipped the scales a little in favor of a loan.

What I remember was going into SBA and while in theory they help you with some of the above info it was really just a few quick and mostly meaningless handouts that didn't help us much at all. Could have been the SBA office we happened to go to and not all.

We were two people with very little understanding of what business was really about, but we were both people very willing to learn and work hard. Since then I have managed to teach myself most of what I would have liked to know then and I didn't need a loan or financial assistance (which maybe argues your point better than mine), but I can see how a little more help than we received early on could have helped to put us on a better track for success.

Again I'm not at all advocating our government just hand out money to people. I've come across plenty of people who would simply take the money and do nothing with it, but my sense is that more could be done to help people get started.

Maybe it's not really money that they need, but rather better education about some things. I'm not really sure. My own experience gave me the sense that there wasn't really much out there, which may have just been my admittedly limited experience with this.

Everyone's seen the stats about X% of businesses failing in the first year and another Y% failing the in the first 5 years. I realize a lot of that is people starting businesses they weren't really committed to or people with very little understand of how to start a business, and even just simply some rather bad business ideas. I can't help but think the numbers also include some hard working people who do understand business and have good ideas and business models, but couldn't weather some early storms. If there were more help for this group of people...

Dan Furman
09-05-2008, 03:41 PM
Everyone's seen the stats about X% of businesses failing in the first year and another Y% failing the in the first 5 years. I realize a lot of that is people starting businesses they weren't really committed to or people with very little understand of how to start a business, and even just simply some rather bad business ideas. I can't help but think the numbers also include some hard working people who do understand business and have good ideas and business models, but couldn't weather some early storms. If there were more help for this group of people...

Yea, I understand exactly what you are saying. And I agree in theory, but the problem is finding these people. It's all but impossible (by the way, I also agree with you on the SBA - next to useless for a small kitchen table startup looking for 5-10k.)

Ad-Vice_Man
09-05-2008, 04:04 PM
Yea, I understand exactly what you are saying. And I agree in theory, but the problem is finding these people. It's all but impossible (by the way, I also agree with you on the SBA - next to useless for a small kitchen table startup looking for 5-10k.)

To clarify a few points about SBA programs that were a little errouneous.

To get a 7A Program SBA loan (business acquisition or start up and operating expenses) you don't need any collateral at all... However, if you have collateral, you have to use it. They want to make sure (as Dan Pointed out) that you're committed to business. The most important things to the SBA to get one of these loans are A) A SOLID business plan and B) Proprietor Expertise in the field of the business.

You're right these loans are more geared for $50k or more Which could in theory encompasse the owners salaray, thus funding living expenses while getting the company off the ground.

However, there are a number of Micro Loan programs out there. Again the county in which I live administers a small Business micro loan program fro loan under $50,000 again the interest rates aren't fantastic... but their still much better than credit cards.

vangogh
09-05-2008, 04:18 PM
I'm definitely not claiming to have the answers here and my experience with this is limited.

Maybe it's changed in the last few years, but we were led to believe no collateral, no loan. It didn't come across to me that the business plan or any prior experience was going to count, but that could be my interpretation of what was going on and I could easily have misunderstood.

Dan I know what you mean about trying to identify those people. It's not always going to be easy, but it just seems to me like something more could be done to help some people.

Ad-Vice_Man I probably wasn't aware of the micro loans at the time. In the end when I started the second time around I wanted to finance things myself anyway so never looked again. Maybe it's not as hard to get help as I'm thinking.

Ad-Vice_Man
09-05-2008, 05:51 PM
Maybe it's changed in the last few years, but we were led to believe no collateral, no loan. It didn't come across to me that the business plan or any prior experience was going to count, but that could be my interpretation of what was going on and I could easily have misunderstood.


Well there's also the very real possibility that the bank you went to just didn't want the hassle.

Just about every bank in america "says" they do SBA loans and are registered with the SBA... but an alarming number of them will turn people away on spec because that particular loan might not be profitable. SBA loans require alot of due dilligence and far too much paperwork on the part of the bank.

vangogh
09-05-2008, 10:35 PM
That's true. I can't say it's every bank that would have given me the same experience. I only went to one and that's the only experience I know of the process. Again my experience with this is admittedly limited.

BillR
09-10-2008, 11:20 AM
I've been through the SBA business loan process a few times. It's actually not too bad.

The SBA doesn't actually lend money of course - they just guarantee loans. Be prepared to show them a LOT of paperwork. The upside of this is you are forced to be very realistic in your planning, etc and do a lot of things to truly evaluate the details of your business.

There's not a chance in heck I'd take government grants for anything though - the strings that come with those things are crazy. Plus the fact of the matter is there really isn't that many grants that apply to most people. The majority of them are either for non-profits or for other specialized interests.

Relicsusa
09-12-2008, 06:39 PM
I think the best opportunity to get financing would be through the Small Business Admin. However, I don't know how they would handle that for a website. It seems one needs to have prior business experience so for most of us that may not be a fit.

blogdog
09-15-2008, 10:19 PM
Did anyone use a government grant or loan to finance their business? I've heard there's a lot of bureaucracy involved in obtaining one of these loans. I'm wondering if that's true.

No, I never have. I think many of these sources of funds are overrated.

chaz
10-09-2008, 08:59 AM
Hello everyone,

Idea Cafe is running its sixth $1,000.00 cash grant for small business owners and startups. If you have a good business idea, you have a chance of winning the grant.

Registration for the grant contest is open at Idea Cafe Grant Information (http://www.businessownersideacafe.com/small_business_grants/grant_information.php?grant_id=9)

Deadline for registration is November 1st '08.

Cheers

mortgage loan
12-02-2008, 03:32 AM
I also heard a lot about that, and can not Ignore this b'coz due to recession this might possible, but still not got proper resource...

phanio
01-17-2009, 10:59 AM
From my experience, it is very hard in the us to get a government grant unless your business is non-profit.

The government does offer two programs. The Federal Government mandates that all 16 of its departments allocate 2% of their budget to provide grants for small, high-tech, innovative businesses.

How these grants are put out is as follows:

These departments put out requests for new products or services that will help them provide whatever services they offer. If you business either already provides a similar product or service or if you think your business could create a specific product or service to meet the request, you can apply. It is not an easy process and there is a lot of competition for these grants.

If approved, you receive the funds and get to work. Another benefit of these programs is that the department that submitted the request, will usually be your first major customer.

Now, you can also submit white papaers to these departments touting your products or services. If they like what you offer or what you intend to offer, they may submit a request to allocate grants for such. However, it still does have to go through the grant process. So, while you get the department to create a grant for your product, you may loose out to a competitor.

The programs are Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR). These program have about $2 billion annually.

I know several companies that were awarded grants under these programs. For example, in the nanotech industry, one business made this their only business. They would submit white paper or compete for request. Once the money was received, they would work to create the product to fulfill the request (sometimes doing so and other failing badly). If they created an acceptable product, they would sell it to the government department and move on to the next request.

You can find more about these programs at SBIR - Small Business Innovation Research (http://www.sbir.gov/about/index.htm)

vangogh
01-17-2009, 02:20 PM
Makes sense. I've never looked for a grant so I have no experience with it, but it always struck me that people make them sound easier to get than they actually are.

phanio
01-17-2009, 02:31 PM
Want to help small businesses? Our government is now focused on spending. Seems they are going to spend no matter what. So, if they are going to spend our money anyways on infrastructure, energy, health, etc., they should mandate that all of those contracts go to small businesses (true small business). This will force the spending down into the communities where the projects are. Providing revenue opportunities to businesses within those communities - not to firms that are several states away from the project. Build the wealth in the community - which create additional opportunities for exisiting businesses and new businesses to grow within the communities.

Tax breaks may be good but take a lot on time to realize any real economic benefit for many business onwers.

Better to provide earning opportunities then breaks.