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While cash from Uncle Sam may not be top of mind for startups, SBA loans can provide low-cost capital

What’s the difference between a startup and a small business? Semantics, mostly. As many startups find themselves struggling to raise funds from venture capitalists as financing continues to decline this year, the U.S. Small Business Administration (SBA) could prove to be a powerful resource for capital, even if startups traditionally look for funds from other sources.

Chris Hurn, the founder and CEO of Fountainhead, knows the potential benefits of taking on government financing. Fountainhead is a nonbank lender of government-guaranteed loans. Hurn said the current generation of entrepreneurs is laser-focused on raising equity-based funding from backers like venture capital firms — but that isn’t their only option, especially as equity gets more expensive in current market conditions.

“The problem is that business owners oftentimes overlook pretty readily available debt capital,” Hurn told TC. “They don’t have to give up any equity. [SBA loans] can oftentimes be the exact stepping stone they need to get to the next stage.”