SBA Loans: Are they Worth it?

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A recent allbusiness.com article speaks of Dr. Donna W. Woo, a 2002 medical school-graduate who hoped to get an SBA loan to help her open her first medical practice.  She then realized that actually getting and SBA loan wasn’t as easy as she thought it would be as, “…landing an SBA loan turned into one of the toughest full-time jobs she has ever experienced.”

The following four key points played the biggest roles in making her SBA loan experience so tedious and time-consuming.

• It took three months
• She put together detailed spreadsheets (showing her projected income month by month and year by year over a five-year period)
• She wrote a thick business plan laying out the past, present, and future of the overall chiropractic market.
• Completed a vast amount of SBA forms (often two or three times each)

And this was before the onset of the “Great Recession.”

Based on the findings of Discover Card and independent research firm, Ramussen Reports, 61 percent of surveyed business owners said they’d be “not very likely” or “not at all likely” to apply for an SBA loan.”

So, if small business owners don’t want SBA loans, what do they want?  Or better yet, what other options do they have?  When comparing the steps that Dr. Woo took in 2002 to get her SBA loan to the steps that must be taken to get a business cash advance, it’s practically a no-brainer.

• You can get your funds in as little as seven business days
• The only documentation needed is 1) an application 2) the last four months of merchant statements 3) a copy of the business lease 4) a copy of your driver’s license and 5) a voided business check
• There is no business plan required
• The application is only two pages

Granted, the business cash advance is not a sufficient funding method for startups (you must have owned your business for at least six months), but there is a multitude of merchants who have owned their businesses for six months or longer and could greatly benefit from a merchant cash advance of up to $500,000.  In fact, in the allbusiness.com article, Dr. Woo says that since she’s opened her business, getting an SBA loan is “not something she’d ever do again,” as she has patients to deal with and simply does not have that kind of time.

For small business owners who want to save time and finally get the cash they need for their businesses, the merchant cash advance is definitely an option to consider.