I was asked to participate in a panel discussion on where small businesses can go find resources to help them grow at the Mayor's Small Business Conference and Expo. Access to resources and assistance can in many cases be the difference between success and failure. Mentors and advisors that have "been there and done that" can help the entrepreneurs avoid the typical mistakes that plague small businesses. While there are a number of sources for assistance I would recommend you look at public resources first. Why? Because like I said in the discussion, "You have already paid for services from public organizations, like the SBA and the SBDC when you paid your taxes. If you aren't taking advantages of what these governmental programs have to offer you are leaving money on the table." Having said that here are a few resources that you should look into to help you build your business.
Consulting, Advising and Mentoring ~ This piece is critical to any business. New business owners often know their product and service but when it comes to business they don't know what they don't know. It is important to get someone to connect with to help and support the efforts to grow your business. Here are three public groups to look to for support:
Procurement Technical Assistance Centers (PTAC) are focused on helping you navigate the mysterious waters of selling to the government. PTAC services include bid preparation assistance, bid-matching services, military specifications, one-on-one training, product and procurement histories, help with information resources, and trade events where Ohio firms can meet government buyers.
SCORE is a nonprofit association, supported by the SBA, dedicated to helping small businesses get off the ground through education and mentorship. SCORE is a network of 13,000+ "volunteers" that provides their services no charge or at very low cost. In central Ohio you can connect with SCORE at www.scorecolumbus.org.
Small Business Development Centers (SBDC) are a national network of business advisors located at leading universities, colleges and state economic development agencies, and funded in part through a partnership with the U.S. Small Business Administration. Approximately 1,000 SBDC service centers are available to provide no-cost business consulting and low-cost training. At Columbus State Community College we have multiple centers to provide specific, targeted business assistance. We have a Core SBDC to provide traditional business assistance. We also have a manufacturing focused center, an international trade center and a Latino SBDC. All of these centers provide no cost consulting, training and access to needed business resources. Click here for a complete overview of the SBDC. In Columbus and Central Ohio you can connect with the SBDC at www.sbdccolumbus.com.
Funding ~ Let's be honest there is still a credit crunch for small businesses. You could probably get $250,000 to buy real estate easier that to get $50,000 for working capital. Here are a couple of public programs that might be able to help you get the money you need.
The Small Business Administration (SBA) is not in the business of making bad loans but rather making loan requests from good businesses "bankable". The SBA doesn't make direct loans. They work with banks and other financial institutions to guarantee a portion of the loan to allow banks to either reduce their down payment requirement or extend their terms. How that helps you is that it leaves more money in your pocket that you can put toward your business.
The primary SBA loan products are:
- 7(a) Guarantee is made by commercial banks with a guarantee provided by the SBA. You will not go to the SBA for this loan. If you qualify for a loan from the bank they may require a guarantee to straighten their position.
- 504 is a participation loan typically made by a Certified Development Company or a bank along with the SBA. Provided mostly for real estate and equipment the lender would provide 50 percent of the capital, the SBA 40 percent (fixed rate) and the borrower 10 percent.
- MicroLoan Programs are small loans used typically for equipment or working capital. Typically these loans are made by SBA designated intermediaries that understand lending from a community development angle. These groups not only make loans but they also provide training and technical assistance that helps prepare the business to get and deploy the funds. In central Ohio the designated micro-lender is the Economic Community Development Institute (ECDI).
One other, non-loan, SBA program that can help your business grow is the 8(a) Business Development program. The 8(a) is basically a multi-year program that will help small and disadvantaged business compete in the marketplace. It provides mentoring to help selected business owners grow customers and revenue as well as helping these companies gain access to federal and private procurement markets.
State and local resources ~ Most states, and some municipalities, have economic development loan programs focused on helping small businesses. While these will vary from state to state the common thread is that they are designed to support job creation and we all know that it isn't large companies that are the job creators, it's small business. Here are samples of some of the programs available in Ohio.
- 166 Loan is similar to the 504 in that is a participation program between the bank (50 percent), the State (40 percent) and the borrower (10 percent). The nice part is the the state portion is priced at 2/3 of prime rate. There is a job creation or retention requirement with this. Within a three-year period, of one job is required for each $50,000 of 166 loan proceeds.
- Ohio Minority Direct Loan Program is similar to the 166 but focused on certified Minority Business Enterprises. The program can fund up to 40 percent of a project with a commercial lender funding 50 percent.
- Collateral Enhancement is similar to a guarantee program where the borrower and the lender contribute between 3 percent and 6 percent into a reserve fund. The State also contributes to the fund to cover potential bank losses in case of default.
- Grow Now is a program that allows the borrower to lower their interest rate by up to 3% on their loan up to $400,000. There is a creation or retention of at least one full-time job or two part-time jobs in the State of Ohio for every $50,000.
- Technology Investment Tax Credit is a tax credit that is applicable to "technology enabled" businesses seeking angel investment. As an enticement for Ohio investors to invest into qualified, technology-based Ohio companies this program reduces the investors state taxes by 25 percent on the amount they invest in these companies.
- The Innovation Ohio Loan Fund makes loans to Ohio technology companies that don't qualify for conventional loans due to technical and commercial risk factors associated with the development of a new product or service. This loan typically follows private equity funding but is much more flexible in what it considers qualified collateral.
So given all that is available, that you have already paid for, make sure you check them out and use them to help you take your business to the next level.
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