Small Business Loans
I have seen too many women who have been screwed in multiple ways from investors. Investors who have given someone egregious terms and the founder takes them because that is their only choice to move forward. Investors who have harassed women to make them feel that their role is only to make them returns and that means absurd expectations of returns, I have seen texts from male investors hitting on female founders. I have seen women take an investment with such dilution that they end up not owning enough of the company and then the next round finds that a red flag. Oh, the stories I can tell.
The most heartbreaking is women who are tenacious and scrappy and figured that all the work that they did prior to meeting with investors was the best way to build the foundation of the company. They took out a small business loan from the SBA, aka our Government. The dirty secret that our Government doesn’t talk about is that they are a business too. They own an insurance company called FEMA. They own a student loan program that has high-interest payments that can and will essentially make it difficult for anyone to unload that debt for decades. They also have housing loans where they approve loans for lenders to first time home buyers that have egregious mortgages that can put the homeowner in a precarious financial position.
The problem with the SBA is that instead of being an agency that supports and gives out loans to people with the hope that they have been vetted to pay back the loan, and of course not everyone will have success, they make them put up their homes and other personal assets for collateral. What happens when the business doesn’t work out is that they either take the home or force the lender to go into bankruptcy which takes a toll on their credit for eternity.
I have never understood why our Government has programs that look as if they are helping their citizens but in essence, they are taking monthly checks from them and if it goes sideways, they screw their own people and cause financial damage that has an economic long-tail that makes no sense.
So, if you are someone who is trying to start their own business and needs some start-up cash, particularly those in the CPG space, which is for some reason where I see this most of the time, do not take a loan from the SBA. Figure out another way to bootstrap your business because many businesses fail but the SBA doesn’t care about failure, they just care about getting their cash back and that could mean more life destruction than you realize.