No Such Thing as Free Money� This article is a re-printed from the�October 2011� edition, as approved by the�

UP Business Today�

By David Saint-Onge�

Despite the rhetoric and in-fighting,�the United States is a great country.�Everyone has the opportunity to be�who and what they want. The liber-�ties enjoyed by all are unequaled in�the world. But as we all chase the�American dream it needs to be made�clear that although you have the right�to pursue happiness, it is not guaran-�teed. This is the quandary many�aspiring entrepreneurs find�themselves.In a capitalistic society,�money remains an integral ingredient�in the recipe for success. In essence,�it takes money to make money. And�although Americans come from dif-�ferent socio-economic backgrounds�and personal situations, the truth is�America still provides the same in-�centives and opportunities regardless�of your situation or status. For aspir-�ing entrepreneurs, too many find�themselves being bombarded with�the feel-good story of 2011; if you�cannot find a job then America will�give you every opportunity to go into�business for yourself. This perpetual�marketing spin goes on relentlessly�in all forms of media and has become�the mantra proclaimed by local, state�and the federal government. But�amid the risky times of the day,�tougher lending standards are forcing�a growing number of small-business�borrowers to seek federal govern-�ment loan guarantees to help loosen�

the purse strings at the local bank.In�an article by Angus Loten published�on September 16, 2011, in the Wall�Street Journal titled, When Govern-�ment Backs your Business Loan,�there are some staggering statistics�on the issue of federally-backed�loans. As the end of the federal fiscal�year nears at the end of September,�the Small Business Administration’s�(SBA) two main lending programs�have already surpassed a record-high�$18 billion in guaranteed loans is-�sued through banks and other con-�ventional lenders. That’s more than�double the full-year total in 2009.�And, depending on the size of the�loan, SBA loans are guaranteed for�up to 85% against default.But despite�the opportunity presented by the�SBA, there are simple realities that�aspiring entrepreneurs must keep in�perspective. First and foremost,�these loans are no different than any�other bank loan. Even though it is�backed by the full faith and credit of�the United States government, the�business model employed by the en-�trepreneur must have the ability to�cover the debt load. Although this�may sound simplistic, the reality is�that many aspiring entrepreneurs ac-�tually think this money is free. Don’t�laugh, it’s true. With all levels of�government pushing entrepreneurial�efforts as a fix to our ailing economy,�the message and facts have been�blurred. Too many economic devel-�

opers don’t talk about the economic�realities of life; loans have to be re-�paid.�

Another issue is that of collateral.�Money is loaned against other fixed�assets and/or the ability to pay. Loan�applicants must still be bankable,�even if the loan is guaranteed by the�government.�

And finally, there is that little pesky�issue called the down-payment. In�the not-to-distant past, you could get�money with almost no collateral and�next to nothing down. Those days�are gone and now loan applicants�need to have at least that 15% neces-�sary to secure even an SBA loan.�That’s $15,000 for every $100,000�borrowed. In short, despite the proc-�lamations throughout the media, you�have to have some money to get more�money. In the end, as the economy�continues its lifeless existence, loan�decisions hang on the business�owner’s character, management ca-�pability, collateral, and equity contri-�bution. There is no such thing as free�money.�

David Saint-Onge serves as Presi-�dent of The e-Loft�(www.theeloft.com), an entrepre-�neurial support company providing�consulting/coaching, business edu-�cational programs, and venture cap-�ital coordination services for The Big�Chair Club, LLC.�