Focus on Finance: Grants and loans: 5 financial resources for small businesses

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By Cathy Williamson

Question: In trying to pursue the American dream and open my own small business, I have run into roadblock after roadblock when it comes to getting a small business loan. Please share any resources you may have to help myself as well as others looking to get started.

Answer: The nation’s economic woes have made it tougher for small businesses to get loans and grants. The SBA’s loan volume has edged up for fiscal year 2013 over 2012, but it’s still down from 2011’s numbers. No statistical data is available for grants, but government budgets have been tight the past few years and many grants have been given by local and state governments.

Yet loans and grants can help save struggling businesses, providing much-needed cash flow to jump-start operations. One way to increase your odds of securing financial aid is to look for programs that target small businesses in your demographic or market segment.

Here are a few of the resources available to small businesses:

1. Accion specializes in helping all types of business owners who have trouble securing traditional loans. Accion lends amounts ranging from $500 to $500,000 and offers financial education, whether you’re just starting up, in transition or looking to grow your company. It also provides assistance to those implementing green practices, running food and beverage operations and more.

2. Center for Community Self-Help brings four lenders together to help small businesses by providing financing and other resources. As of December 2011, the center has provided more than $6 billion in financing to nearly 75,000 individuals and organizations through the collaborative effort. The center provides general and specialty small business loans, along with financing for nonprofits, childcare centers, real estate projects, and other organizations that help strengthen communities. Unlike traditional lending institutions, the center is not-for-profit, believing investing in small businesses and local organizations helps build better communities and provide opportunities to those who traditionally wouldn’t have had access to them.

3. The Small Business Innovation Research program seeks entrepreneurs who are interested in getting involved in research and development. Various federal agencies set aside 2.5 percent of their research and development budgets to work with small businesses on encouraging innovation. The SBIR program awards up to $150,000 for phase one, where the agency determines the project has what it takes to succeed. If the project progresses to phase two, the federal government could grant as much as $1 million for up to two years. If the project is successful, your small business receives all the profits.

4. The Minority Business Development Agency provides loans to minority-owned small businesses. The federal agency has centers set up throughout the U.S. to advise business owners on what loans are available when banks prove to be dead ends. Each center is staffed with a specialist who works with minority business owners to help them succeed. The agency also works on advocacy and outreach to ensure minority-owned businesses have the information and support they need.

5. The SBA Microloan Program lends up to $50,000 specifically targeted to purchases of furniture, inventory or equipment. Prior to approval, you may be asked to participate in a training session hosted by the lender, designed to help you be successful as a small-business owner. This training can be anything from a one-on-one counseling session to a seminar or class, with length and content determined by the lender. The lender may help you learn how to set up a website, understand how the SBA can help you or provide other forms of small business consulting.

Good luck in your new business endeavor.

What is Focus on Finance?

Have a question about your finances? Submit it to our panel of local experts who answer your questions on The News-Enterprise Money page every Sunday.

A panel of local experts with experience and knowledge of this community respond to questions about 401(k)s, 403(b)s, annuities, certificates of deposit, home mortgages and/or refinancing, investing in the stock market, financing retirement, reducing income taxes and related topics. Email your questions to: focusonfinance@thenewsenterprise.com or mail to: Melanie Parker, The Wright Legacy Group, LLC, 1104 Julianna Court, Elizabethtown, KY 42701.


Cathy Williamson is manager of the Lincoln Trail Area branch of the Better Business Bureau. Contact her at 270-982-1289 or cwilliamson@ bbbkyin.org.