Considering raising capital, apply for SBA loans first. . .

This afternoon I was talking to an entrepreneur with a startup doing more than a million in revenue. They are expanding and will need around half a million to hit break even given their expansion plans. It isn’t the perfect time to be raising money in his space, but his business is so unique I am fairly certain he will be able to find the money – eventually, at some price.

I began thinking about whether or not I would be interested in doing all or part of the deal and began running through a number of questions. Finally it occurred to me that based on what I would want in return for my money and how confident he was in his success that our concept of ‘fair’ relative to valuation would be very different. I asked if he had applied for an SBA loan and while he had talked to a few banks (who turned him down), he had never asked about a 7(a) loan backed by the U.S. Small Business Administration.

Full Story: http://www.texasstartupblog.com/2008/09/04/considering-raising-capital-apply-for-sba-loans-first/