Need financing?Government Assistance to Small Businesses
If your business has a staff of one, you might feel you are facing a difficult (and sometimes treacherous) world all alone. You might get that same feeling if you have a staff of hundreds if you lack anyone you can turn to for help or advice. That need not be. Both the federal and state governments provide extensive help (much of it free) to entrepreneurs. In the second installment of this article, I’ll look at what California offers, but let me start with available federal assistance.
One of the best sources of help for small businesses is (as one might expect from its name) the Small Business Administration (. Created through the Small Business Act of 1958, the SBA has delivered millions of loans, loan guarantees, contracts, counseling sessions and other forms of assistance to small businesses. While it’s best to start at the primary website (https://www.sba.gov), almost all SBA services are available locally, either through district offices.
The San Francisco District Office (SFDO) of the SBA helps Northern Californians start, build and grow businesses. SFDO, located in downtown San Francisco) serves fourteen northwestern California counties: Alameda, Contra Costa, Del Norte, Humboldt, Lake, Marin, Mendocino, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano, and Sonoma. In Fiscal Year 2015, the District guaranteed nearly 2,000 small business loans valued at over $1 billion. 125 banks, credit unions, and community lenders participated in this program. Annually, the San Francisco District Office cohosts over 1,000 training events for over 50,000 Bay Area small businesses or prospective businesses from SBA resource partners.
SBA has five other district offices located around the state offering similar levels of assistance to small businesses.
The SBA also provides its services through a number of organizations. Some focus on particular subsets of the market (such as women, veterans, exporters and the like). Other services are usually more general in scope. I’d like to start with two of the latter, SCORE and SBDC.
SCORE was established to provide a mechanism for retired individuals to share their experience and expertise with small business owners. All of the SCORE personnel at the individual chapter level are unpaid volunteers. They are prohibited from participating materially in any business they mentor, and from accepting any compensation from the businesses they work with. Also, all counseling sessions and any information provided in those sessions is considered proprietary. Mentors are not even allowed to disclose the names of clients without the client’s permission. Many clients achieve enough success that they willingly “go public” about the help they have received from SCORE.
Most chapters provide biographical information on their mentors. This allows those who would like assistance to obtain a mentor with the optimal background for their needs. The time a mentor can spend with a business is limited only by the mentor’s personal availability. SCORE mentors offer a business encountering problems an objective look that can often note causes the business owner doesn’t see. A mentor can also assist in analyzing proposed changes in a business’ structure or focus.
Local SCORE chapters also offer a variety of workshops. One of the most beneficial is the “Simple Starts” workshop which addresses the primary areas of starting up a business, from business plans to financial structure. For new businesses, most mentors recommend that the client attends this workshop before their first mentoring session to start with a clear concept of how the business should be run. SCORE does charge a nominal fee for each workshop, but all other SCORE services are free.
The San Francisco chapter of SCORE, located adjacent to SFDO, has more than 50 retired and active professionals to meet the mentoring and workshop needs of bay area small businesses. My chapter, Santa Cruz County, has a staff of just over twenty. Between those two chapters, businesses have access to over three thousand years of business experience. Many people believe that SCORE should only be utilized when a business is in trouble, but this level of experience should deliver a different message: SCORE can also help make a successful business more efficient. SCORE mentors can also give a business a “health check-up.”
Chapter websites and addresses can all be accessed from the national SCORE website. On the national website, business owners can find additional information and sign up to receive information on webinars offered on a variety of business subjects. One precious tool on the website is a set of instructions (and a template) for preparing a business plan. The biggest mistake an entrepreneur can make is to try to start a business without a business plan.
Small Business Development Centers (SBDCs), which usually work in close collaboration with their local SCORE chapter, are located around the country, usually on a college campus. They offer aspiring and current small business owners a variety of free business consulting and low-cost training services. They are also the best point at which to start an application for financial assistance, largely because they have developed relationships with those local banks willing to provide small business loans. In addition to SBA loans, they can help clients with agricultural loans, micro loans, and lines of credit. Part of their close relationship with SCORE comes from the referral of SCORE clients to SBDC for loan support.
They can help new businesses develop business plans, buy existing businesses, develop marketing plans, set up QuickBooks accounting systems and establish human resources systems. For established businesses, they also offer help with accounting systems, bookkeeping systems, business expansion planning and the analysis of cash flow projections and financial planning. Their association with local universities and community colleges allows them to offer various seminars on such key topics as social media presence, search engine optimization, online selling and web optimization.
Details on SBDC can be found at https://www.sba.gov/tools/local-assistance/sbdc. With dozens of host networks branching out with hundreds of service delivery points throughout the U.S., the District of Columbia, Guam, Puerto Rico, American Samoa and the U.S. Virgin Islands, SBDC assistance is available virtually anywhere.
Women’s Business Centers
Women’s Business Centers (WBCs) are a network of nearly 100 educational centers throughout the United States and its territories. They are designed to assist women in starting and growing small businesses. WBCs seek to “level the playing field” for women entrepreneurs, who still face unique obstacles in the business world. The WBC network provides entrepreneurs (especially women who are economically or socially disadvantaged) comprehensive training and counseling on a variety of topics in several languages. SBA’s Office of Women’s Business Ownership (OWBO) oversees the network
U.S. Export Assistance Center
Exporting can enable small businesses to increase sales and profit, reduce dependence on the domestic market and stabilize seasonal fluctuations. Export Assistance Centers, located in major metropolitan areas throughout the United States, can help entrepreneurs expand into that area. Each U.S. Export Assistance Center is staffed by professionals from SBA, Department of Commerce, Export-Import Bank and other public and private organizations. Together, their mission is to help small and medium sized businesses compete in today’s global marketplace by providing export assistance.
Veteran’s Business Outreach Center
The Veterans Business Outreach Program (VBOP) is designed to provide such entrepreneurial development services as business training, counseling and mentoring, and referrals for eligible veterans starting or managing small businesses. The SBA has 15 organizations participating in this cooperative agreement and serving as Veterans Business Outreach Centers (VBOC).
Procurement Technical Assistance Center
Doing business with the government is one possibility for growing a business. Procurement Technical Assistance Centers (PTACs) provide local, in-person counseling and training services for the small business owner. They provide technical assistance to businesses that want to sell products and services to federal, state, and local governments. PTAC services are available either free of charge or at a nominal cost. PTACs are part of the Procurement Technical Assistance Program, which is administered by the Defense Logistics Agency (DLA). A PTAC can determine if your business is ready for government contracting. Pursuing government contracts is a challenge, and can be a burden for any company that lacks the resources to handle a contract. A PTAC representative can meet one-on-one with business managers to determine if the business is ready and to help position it for success. A PTAC representative can look into past contracts to see what types of contracts have been awarded to similar businesses. PTAC can help a firm identify and bid on a contract, and if awarded the contract, measure performance and help with contract audits.
PTAC can help to ensure a firm is registered in the appropriate places. There are numerous databases on which to register to get involved with the government marketplace: the Department of Defense’s System for Award Management (SAM), GSA Schedules, and other government vendor sites. A PTAC representative can explain where and how to register. PTAC can also for set asides, contracts that must be awarded to businesses with special certifications, such as woman-owned, small disadvantaged businesses and HUBZone. A PTAC representative can help obtain these certifications.
SBA Loan Programs
SBA offers a variety of loan programs for very specific purposes. The 7(a) Loan Program, SBA’s most common loan program, includes financial help for businesses with special requirements. SBA’s Microloan Program provides small, short-term loans to small business concerns and certain types of not-for-profit child-care centers. CDC/504 Real Estate Loans provide financing for major fixed assets such as equipment or real estate. SBA also provides low-interest disaster loans to businesses of all sizes, private non-profit organizations, homeowners, and renters. SBA disaster loans can be used for a broad variety of repair or replacement needs.
It’s important to understand what the SBA loan program does not do. Pursuing a loan that SBA policy say will never be granted can lead to an unnecessary (and frustrating) waste of valuable time. SBA does NOT provide grants for starting and expanding a business. Grants from the Federal government are authorized and appropriated through bills passed by Congress and signed by the President. The grant authority varies widely among agencies. SBA has authority to make grants to non-profit and educational organizations in many of its counseling and training programs but does not have authority to make grants to small businesses. The announcements for the counseling and training grants will appear on grants.gov.
Some business grants are available through state and local programs, nonprofit organizations and other groups. For example, some states provide grants for expanding child care centers; creating energy efficient technology; and developing marketing campaigns for tourism. These grants are not necessarily free money, and usually require the recipient to match funds or combine the grant with other forms of financing such as a loan. The amount of the grant money available varies with each business and each grantor.
If you pursue funding through SBDC, you will avoid the frustration of pursuing the unavailable. SBDC loan personnel are experts who thoroughly understand SBA and lender loan requirements. You should also understand that none of the SBA loans come directly from the SBA. The actual funds come from a financial institution that has been willing to advance funds on the basis of an SBA loan guarantee.
There are many sources of help at the federal level that I haven’t mentioned because they are extremely specialized. In most cases, the sources I have mentioned will refer qualified people to those sources. There are also many state sources of assistance. Watch for the second installment of this article, which will discuss what the state of California offers. In the meantime, get a SCORE mentor, and take advantage of what SBDC has to offer.
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