Where Small Business Loans Come In

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Welcome back to the Sunstone Way.

We recently talked about how governments are key to the economy. This week I’d like to go into a little more depth about one facet of that reality – small business loan guarantees.

It is no secret that the availability of venture capital and investment capital in general has decreased, caused primarily by rising interest rates and unease about banks after the collapse of Silicon Valley and Signature banks. But the need for operating capital hasn’t gone away.

So where do founders of startups turn? One option is a loan at least partially guaranteed by the U.S. Small Business Administration.

American Lending Center, a partner of Sunstone Management, is able to connect startup Founders with several innovative small business loan programs that can help with early-stage development and growth. These include the California State Small Business Credit Initiative and Federal Small Business Administration 7(a) Loan programs among others.

What It Takes, and What It Does

“The U.S. Small Business Administration helps small businesses get funding by setting guidelines for loans and reducing lender risk. These SBA-backed loans make it easier for small businesses to get the funding they need.”

That’s straight from the SBA’s own website. But it’s not just a matter of walking in and asking for money.

Like any other financial agreement, a small business loan requires you to have a stated purpose for the money. And it also requires that you have at least decent credit – a 630 or more composite credit score is a good rule of thumb.

Government participation is key because the SBA loan guarantee works as a substitute for part of the needed collateral and provides the lender with satisfactory security to support the loan.

Once a small business or sole proprietorship qualifies, the options are impressive. A 7(a) loan, the SBA’s most common loan, can be used for working capital, purchase or repair of equipment, even refinancing of current business debt.

The State Small Business Credit Initiative (SSBCI) is also a program financed by the federal government, but the money is distributed through the state. American Lending Center was authorized last year to participate in these loan guarantee programs.

Once loans are approved, financing proceeds include start-up costs, construction, inventory, working capital, business expansion, agriculture, lines of credit and more.

It should be stressed that these programs are loans – they must be repaid. But they are an alternative to keep our young businesses alive while they grow.

That’s the Sunstone Way.


More About Sunstone Management 

Sunstone Management is a diversified private capital sponsor firm located in Southern California that invests in diverse early-stage technology entrepreneurs who seek to build great companies. We believe in the aspirational power of the American economy to attract and inspire investors and entrepreneurs from throughout the world. We deliver new and exciting opportunities for economic growth through the creation of innovative public-private partnerships, and our unique experience across government, education, and private sectors. Identified by Financial Times as one of America’s Fastest Growing Companies three years in a row.

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