- Girdley's Small Business MBA
- Posts
- Elon is totally wrong
Hey everybody,
Recently, a certain big shot EV / rocket company / DOGE guy started coming after the SBA loan program, saying it’s wasteful and should be shut down.
In my opinion, he couldn’t be more wrong.
So here’s my rant: why the SBA 7a program is the backbone of the American economy.
Looking to finance a business acquisition? I’m hosting a lecture / Q&A with Heather Endresen (financing expert! founder of Viso Capital! Acquisitions Anonymous co-host!) next Thursday. 100% free!
—
The SBA 7(a) program is a beautiful thing. It’s one of the best partnerships in the world between government and private enterprise.
You know how I know it’s good? Every Canadian I talk to is super jealous we have it.
If you’re not familiar: it helps regular (non-rich) people buy small businesses by backing loans that traditional banks wouldn’t touch.
Say a small-to-medium business is generating $400K / year in profit — it would probably sell for $1.5M or a little more. If you’re a trust fund baby or have rich parents, you can just buy it outright.
But those kinds of numbers are out of reach for the vast majority of Americans.
So it’s great for buyers.
After all, what’s more “American dream” than someone from modest means getting into business ownership?
It’s also great for sellers. Think of all the people who have spent their lives building small businesses, but have nobody to take it over. If they can’t sell, they’ll never retire and take advantage of all the value they’ve been building for decades.
The SBA program lets these businesses change hands, and gives America a level of liquidity in our small business entrepreneurship that other countries just don’t have.
Next: how it actually works.
TOGETHER WITH PONO VENTURES
We’re sending Girdley readers free Hawaiian chocolate.
Yup, you read that right. We believe marketing should actually be sweet.
If you run a B2B business and want to grow faster, click below—we’ll send you our favorite Hawaiian chocolate as a friendly Aloha.
Who’s behind this?
Pono Ventures is a plug-and-play marketing team built by serial entrepreneurs.
We help firms grow, and provide guarantees.
We’re offering 10 free 60-minute strategy sessions where we’ll break down what’s working in your industry and how we’d grow your pipeline.
No strings. Just smart strategy (and chocolate).
How it works
If you ask your local bank for a loan to buy a business, that’s a risky bet for them.
Why? Because you may not have the assets to cover that loan if your business fails. And the stats show that small businesses are much more likely to fail than big businesses.
So a bank can’t “safely” underwrite you.
That’s where the SBA steps in. They back the loan — as long as you personally guarantee repayment. That means you, the borrower, are putting everything you own on the line.
And voila, an unfinanceable deal becomes financed.
The program works.
—
Is it perfect? No.
Some people get in over their heads. Sometimes the fees are too high. There are plenty of valid criticisms. But overall, the failure rate is really low.
Fully half the jobs in the United States are in small businesses. Not Amazon. Not AT&T.
So in my opinion, as someone who's dealing with small businesses all day, working with people trying to make their own way in this country and become entrepreneurs — we’d be totally insane to think anything but good about this program.
Sure, there are risks. A personal guarantee is no joke. But it gives a path to people who are really determined.
And isn’t that what we want in this country? To be a place where people can make it? Where grit and hard work can get you ahead?
That’s the America I want to live in.
—
3 things from this week
Appetizer: My pal Connor Groce has been diving into YouTube lately. Super helpful stuff if you’re in the market for a franchise. Here’s his guide to reading FDDs:
Main: My buddy Nick Huber has put out his long awaited book this week — it’s called The Sweaty Startup. I got an early copy and flew through it — tons of super concrete business advice! Worth picking up a copy.
Dessert: Shared this again recently. By the way, the hurdle in question is as simple as “use this specific subject line in your application.”
Thanks for reading!
Michael
P.S. Got questions about the SBA program? Come to the lecture this Thursday, and there will be plenty of room for Q&A with me and Heather (who knows 10x more than I do about this!).
Here’s the link to RSVP – and if you can’t make it then, still sign up and I’ll send you the recording!
Get new content like this every week, straight to your inbox → Sign up here!
MORE WAYS I CAN HELP YOUR BUSINESS
💡 START → The Low-Risk Business (ebook)
Get the 5-step framework I've used to build multiple businesses from scratch. 40 pages of hands-on, practical guidance.