Funding
A majority of the start-up businesses that come through our doors inquire about grants, loans, and initial funding. Answers to these questions are often hard to give. There is a widespread notion that there is money out there for people looking to open a hair salon or consulting firm or whatever it might be. Unfortunately, that is not the reality.
Government grants are given out for research, for non-profits, and not much else (i.e., not for commercial ventures). Even if you happen to be starting a non-profit, grants are often hard to secure, and there are some pretty particular reporting requirements in order to maintain that funding.
Sometimes grants are allocated to small businesses in industries like childcare or green technology through state or local organizations, but they often require matching funds or other combined financing. Business.gov offers this online tool to search for grants you might qualify for.
Loans, on the other hand, are pretty widely available to small business start-ups. Here are some resources:
SBA 7(a) Loan Program guarantees small business loans from banks and other lending institutions for both start-up and existing small businesses. This is the most common option for SBA guaranteed loans and because most banks and some other commercial lenders participate, loans are widely available. While the lender agrees to structure the loan, it shares the risk with the SBA, making it easier to make loans to small business owners. Find out more about the 7(a) Program on the SBA website.
SBA Micro-Loan Program is another lending option with the SBA that provides. These are small, short-term loans that average $13,000 and max out at $25,000 and are distributed through community organizations with SBA funds. Find out how to apply for an SBA micro-loan here.
New York State’s Community Development Financial Institution Assistance Program (CDFI) provides micro-loans to business owners who may not qualify for bank loans, as well as minority and women-owned businesses. CDFI also offers one-on-one counseling and business development assistance to facilitate credit-readiness. Click here to find more information and a list of participating financial institutions.
New York Business Development Corporation (NYBDC) is an organization that works in partnership with lending institutions to provide term loans, many of which do not meet the requirements for traditional financing. NYBDC, a WBC resource partner, handles lending for non-profits, veterans, women and minority-owned businesses, business located in Empire Development Zones, and other conventional business ventures. Find out more about these services on the NYBDC website.
If you’re looking for further resources, Business.gov has a lot of information on small business financing. Check out the user forums for additional insight.
What has been your experience looking for grants and loans as a small business owner or start-up? Leave a comment.
Author: Biz Tips, Financial, Funding, Resources, Start-Up | No Comments »
This past Tuesday, the Small Business Administration released this statement about fraudulent attempts to offer SBA loans:
********
WASHINGTON – The U.S Small Business Administration (SBA) is warning small businesses to use caution if they are contacted by firms offering to help them apply for funds available through SBA programs.
SBA and SBA’s Office of the Inspector General (SBA OIG) have received several complaints from small businesses about abusive marketing practices, scams, and exorbitant fees charged by firms offering to help them obtain a loan, grant, or other federal funds, from SBA.
Some of these complaints include:
- Firms charging small businesses high fees to provide assistance applying to SBA funding programs. Some firms allegedly guaranteed that the small business would obtain SBA funding if they paid the fee. SBA does not endorse or give preference to specific private companies or their clients.
- Firms charging small business for services never requested after the small business gave bank account and routing information to a caller claiming to be a firm offering assistance. SBA recommends that small businesses never provide social security numbers, bank account information, or credit card numbers to anyone; and, never over the telephone.
- Firms alleging that a small business would be issued a “foreiture letter” that would make the small business ineligible for any SBA funding for three years if the small business refused to use the firms services.
When electing to use a third party to apply for SBA funding programs, small businesses should also bear in mind:
- Small businesses can get free assistance in person or by calling one of SBA’s 68 District Offices [you can contact the Buffalo District Office at (716) 551-4301] and from information on SBA’s website. They can also get assistance from Small Business Development Centers, Women’s Business Centers, Veterans Business Outreach Centers and SCORE Chapters, either free or for a reasonable fee. Location and contact information can be found on the SBA’s website.
- Small businesses should ask for references and confer with trusted colleagues and institutions, such as the Better Business Bureau, when selecting service providers.
- Small businesses should clearly establish and document: (1) What they are being charged; (2) When they will be charged; (3) What they must do; and (4) What services they will receive.
SBA’s Office of the Inspector General will investigate and respond to all complaints. SBA encourages anyone with knowledge of a misrepresentation regarding SBA Business Loan Programs, or any other SBA program, to contact SBA OIG by calling the OIG Hotline toll-free at (800) 767-0385, or submitting an online report at the SBA OIG website, and click the link for “Report Fraud Waste or Abuse.”
********
In other small business news, the SBA also announced that it will be extending Recovery funding through the month of April.
The $40 million extension is estimated to support about $1.4 billion in small business lending.
The SBA will continue to waive loan fees and provide higher guarantee levels for 7(a) loans until April 30th, 2010, or until the funds provided by the bill are exhausted.
To find out more about securing small business funding through the SBA, click here.
Click here to leave a comment.
Author: Financial, Funding, In the News, Policy | No Comments »