SHANE PIERSON
Purveyor of Honest Capital
Let’s cut the crap and get real.
I’ve been in the SBA lending game for about 20 years now, and while I make a living putting entrepreneurs into these loans, I’m not about to pretend they’re the godsend of financing. I’ve built my personal brand trying to be honest and candid. I hate sugarcoating. The truth is, sometimes an SBA loan is a downright terrible choice for your business. Not just “meh” or “slightly off,” but truly, fundamentally wrong.Not a magic wand…
Sure, the SBA 7(a) program can help you buy that business you’ve always wanted or fund your big expansion. But if your business model doesn’t pencil out, no amount of cheap (kind of) government-backed money is going to save you. Think of it like this: handing someone a plethora of the finest paints won’t suddenly make them a Picasso. If your business plan resembles a leaky bucket—poor management, nonexistent margins, lackluster demand—pouring SBA money into it won’t magically turn it into a shiny, profitable enterprise. Sometimes, the best answer is to go back to the drawing board rather than forcing a square peg (your half-baked idea) into a round hole (an SBA loan).It can take a long time… sometimes…
There’s a reason you see those cringy memes about government paperwork: it’s often slow. Really slow. While I’ve seen SBA loans close in as fast as 20-35 days, it can easily drag on MUCH longer when the deal is just not right. If you’re trying to strike while the iron’s hot—maybe a competitor is selling their business at a wicked low price, or you need to act fast in a fast-moving supply chain—an SBA loan might have you waiting on the sidelines, twiddling your thumbs as the bank appears to be getting quieter and quieter. A month of red tape could cost you market share or that golden opportunity staring you right in the face.
The Red tape is freaking real
Due diligence is a must, but let’s face it: the SBA and its most active lenders don’t hand out money like Mr. Beast. They require personal guarantees, detailed financials, projections, industry research, and sometimes three years of tax returns—just for starters. Don’t get me wrong, you should know your numbers. But if your time-to-market or expansion strategy is more “we’ll figure it out as we go,” an SBA loan is going to feel like trying to squeeze through an air duct wearing a winter coat (a nightmare I once had). For business owners who thrive on speed and simplicity, the SBA’s process can be the opposite of what will get you over the finish line.
The SBA likes to take take take collateral
SBA loans often require collateral, and personal guarantees are always on the table if you are a 20% or more owner of the company. With the exception of loans under $500,000, if the idea of putting your home equity at risk to fund an unproven concept gives you hives, steer clear. Let’s be real: if you truly believe in your business and it’s stable, a personal guarantee might not scare you. But if you’re even a little uneasy about staking your personal assets, understand this: if things go south, it’s not just a business failure—it could be your house, or even your family’s security at stake. That’s a big bet to place on a program that’s already making you jump through flaming hoops.
A reality check (before you torch the idea)
That said, SBA loans shouldn’t be tossed out the window just because they aren’t a quick fix or a high-octane shortcut. In many cases, these loans can be a smart, stable, and fairly affordable source of capital for businesses with a solid foundation and a clear growth plan. If you’re willing to do the work, gather the paperwork, and have the patience to navigate the process, the SBA can help you secure capital at terms that beat many alternative lenders. Use it to scale operations, add equipment, or acquire a competitor—just make sure your house isn’t on fire before you strike that match.
It’s a tool, not a Savior
SBA loans are not heroes, nor are they villains. They’re tools; ones that can absolutely serve your long-term goals if you’re prepared to play by the rules and put in the effort. If your company is standing on solid ground, if your team knows its numbers through and through, and if you can stomach a more intentional pace, an SBA loan might be the best financial decision you’ll ever make. Just remember, it’s not about painting a rosy picture or pushing through a deal no matter the cost; it’s about knowing when the SBA’s brand of honest capital truly aligns with your vision, your timing, and your risk tolerance. That’s not just hype—it’s good business sense.
