Remember your parents telling you that “money doesn’t grow on trees”? Well, when starting a business that’s certainly right on the mark. However, we do often receive erroneous information from a variety of sources about where we can secure funding for a start up. Two of the biggest myths involve government grants and SBA loans for small businesses.
“The government has grants for startups.”
This is a wishful fantasy. The federal government does not have any programs that lend money directly to any business. While some States may develop their own programs to support economic development, they typically only involve resources for individuals with disabilities, veterans, or minorities.
“The SBA loans money directly to small businesses.”
The SBA does not lend money to businesses. The SBA is the guarantor of three different loan programs that directly benefit small-business owners. They are the 7(a) loan program, the 504 loan program and the micro loan, or 7(m) loan program. The SBA assists in facilitating financing through a network of lending partners, including local banks, community development organizations, and micro lending institutions, but does not lend any money.
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