Below is information culled from the United States government's Small
business Administration. It can be useful for members of vicugs who are
using technology to start or run a business.
There is a line of 10 dashes between each item for easier searching. To
make sure you have received all of this file, the pgrase "end of
document" aappears at tehh end.
kelly
Contents
(1) announcement about SBA on the information superhighway;
(2) directory of programs and services;
(3) catalog of publications;
(4) description of the Handicapped Assistance Loan (HAL) program;
(5) eligibility criteria for assistance to minority-run businesses;
(6) answers to the most asked questions about small business; and
(7) guide to financing a business.
The HAL program has not been funded in recent years. Entrepreneurs
with disabilities, however, can qualify for minority assistance by
providing evidence of social and economic disadvantage (as
explained in the included information on such eligibility).
To help one browse these materials, I've inserted a line of 10
dashes between sections. Since the compilation is about 175K in
size, I've put "End of Document" at the bottom to indicate whether
you received it completely. If not and you want it, let me know
and I'll send it on disk.
Jamal Mazrui
National Council on Disability
Email: [log in to unmask]
----------
SBA ON THE INFORMATION SUPERHIGHWAY 9/96
The U.S. Small Business Administration puts you on the information
superhighway with SBA OnLine (an electronic bulletin board) and the
Internet. These services help you find the resources you need to
start and expand your business, 365 days a year. Easy-to-use menus
help you access information, training, shareware applications you
can download, data from other federal agencies, special-interest
groups, and other on-line services. It also provides global links
to other resources.
Information and Assistance
Specific services include:
General Information
* Guides to starting and operating a business
* Sources of financial assistance
* Help for minority-, women- and veteran-owned businesses
* International trade information
* Government laws and regulations for small business
* State small business profiles
* Government procurement assistance
* Quick searches
* Property for sale
* Business cards
* And more...
Business Education
* Developing a business plan
* Financing your business
* Marketing
* Franchising
Local Information
* Calendar of SBA-sponsored events
* State business profiles and indicators
* Certified and preferred Lenders
* SBA District Offices
* SBA Disaster Area Offices
* BICs -- Business Information Centers
* SBDCs -- Small Business Development Centers
* SBICs -- Small Business Investment Companies
* SCORE -- Service Corps of Retired Executives
Downloadable Files
* SBA publications
* Training-course workbooks
* Business contacts
* Business-specific shareware
Data from Other Agencies
* U.S. Patent Office
* U.S. Census Bureau
* U.S. Internal Revenue Service
* U.S. Senate and House of Representatives
* Chambers of commerce
* Gateways to over 60 other on-line services
SBA OnLine
SBA OnLine is a bulletin-board system, or BBS, that offers simple
menus, hotline technical support and on-line help. It is easily
accessed by anyone with a computer, modem, phone line and communi-
cation software. A toll-free number provides access to:
* SBA and other government agency information
* Downloadable files
For a small user toll, you can access:
* Downloadable application software
* Gateways
* Personal mailboxes
* Internet mail and news groups
* Searchable data banks
E-mail and Special-Interest Groups
Mailboxes are available for:
* the SBA chief counsel for advocacy
* SCORE counselors
A special-interest group, or SIG, provides a forum for businesses
with a common interest to communicate and exchange information.
Examples of the many SIGs available are:
* Advertising
* Agriculture
* Aviation
* Communications
* Computer services
* Construction
* Desktop publishing
* Education
* Home-based businesses
* Mail-order businesses
* Internet news groups
* And more...
SBA on the Internet
The SBA offers a number of Internet services. Through the SBA Home
Page, you can get information on starting, financing and expanding
your business. The SBA Home Page offers detailed information on SBA
and other business services available to you, access to SBA OnLine,
and links to outside resources on the World Wide Web.
The SBA Home Page also provides:
* SBA gopher
* File transfer protocol (FTP)
* Wide-area information server (WAIS)
Global links to outside resources include:
* White House Home Page
* U.S. House of Representatives and Senate
* U.S. Business Advisor
* State resources
* Worldwide business resources
* Links to numerous other federal agencies
How to Access SBA OnLine and SBA on the Internet
SBA OnLine had the SBA's Internet WWW access provide a fast and
easy way for the small business community to access up-to-the-minute,
relevant information and assistance 365 days a year.
SBA OnLine BBS
Number Access Usage
(800) 697-4636............SBA and other government agency information
............Downloadable files
(900) 463-4636
(14 cents per minute).....SBA and other government agency information
(202) 401-9600............Washington, D.C., metro area
(toll charge varies by local service provider)
............Downloadable application software files
............Gateway
............Mail
............Internet mail and news groups
............On-line searchable data banks
(202) 205-6400............Technical support
SBA on the Internet
using uniform resource locators (URLs)
Home Page:
http://www.sba.gov
Gopher:
gopher://gopher.sba.gov
File transfer protocol:
ftp://ftp.sba.gov
Telnet:
telnet://sbaonline.sba.gov
U.S. Business Advisor:
http://www.business.gov
For More Information
Make it your business to know what is available, where to get
it and, most importantly, how to use it.
Sources of information include:
U.S. Small Business Administration
* SBA District Offices
* Small Business Development Centers (SBDCs)
* Service Corps of Retired Executives (SCORE)
* SBA OnLine (electronic bulletin board)
* Business Information Centers (BICs)
The SBA has offices located throughout the United States. For the
one nearest you, look under "U.S. Government" in your telephone
directory, or call the SBA Answer Desk at (800) 8-ASK-SBA. To send
a fax to the SBA, dial (202) 205-7064. For the hearing impaired,
the TDD number is (704) 344-6640.
You also may request a free copy of The Resource Directory for
Small Business Management, a listing of for-sale publications and
videotapes, from your local SBA office or the SBA Answer Desk.
Other Sources
* State economic development agencies
* Chambers of commerce
* Local colleges and universities
* Libraries
* Manufacturers and suppliers of small business products and
services
* Small business or industry trade associations
All of the SBA's programs and services are provided to the public
on a nondiscriminatory basis.
FS0065 (9/96)
----------
PROGRAMS AND SERVICES
2nd Edition FY1996
U.S. Small Business Administration
Championing America's Entrepreneurs
Owning a business is an exciting - and sometimes frightening - experience.
You give it everything you've got and still, at times, you need some help.
The SBA has been championing America's entrepreneurs since 1953. Together,
we have a partnership that works for America. We help you to start and to
build a stronger business. You create the jobs that strengthen the economy
and the nation.
We are pleased to present this new, comprehensive guide to the SBA's
programs and services. It contains information on all of our resources
that can help you start or expand your business.
Together, we can help make your dreams a reality.
Philip Lader
Administrator
Discover the Power of Partnership with the SBA
Helping You Start Your Business
The SBA's programs can assist you with every aspect of starting your
business, from developing a business plan to obtaining financing, from
marketing products and services to managing your company. The SBA helps
your business start strong and stay strong.
Helping You Expand Your Business
The SBA's programs and services can guide you through each stage of growing
your business. We offer management assistance, business planning, financing,
access to federal contracts, and much more.
On the following pages, you will find a summary of our programs and
services. Many of our counseling and assistance services are free-of-charge.
For more information on how the SBA can help your business, call us - we
have an office in every state.
Access to Information
SBA Answer Desk
The Answer Desk is a toll-free information center that answers questions
about starting or running a business and how to get assistance.
A computerized telephone message system, the Answer Desk is accessible 24
hours a day, seven days a week. Answer Desk operators are available Monday
through Friday from 9 a.m. to 5 p.m. ET. Call (800) 8-ASK-SBA.
SBA OnLine
SBA OnLine is an electronic bulletin board that provides concise and cur-
rent information about programs and services that can assist in starting
and running a business. It also includes many SBA publications. Accessed
by modem (9600, n, 8, 1), it operates 23 hours a day, seven days a week,
and is updated daily. To access SBA OnLine, dial (800) 697-4636 or (900)
463-4636. The SBA OnLine number for the D.C. metro area is (202) 401-9600.
On the Internet
The SBA Home Page offers detailed information on SBA and other business
services, access to SBA OnLine, and links to outside resources on the World
Wide Web. For information on how to access the SBA Home Page, see the
section titled "For More Information."
U.S. Business Advisor
When it is completed, this World Wide Web site will be a one-stop electronic
link to all the business information and services the federal government
provides. With the U.S. Business Advisor, small businesses will no longer
have to contact dozens of agencies and departments to access applicable laws
and regulations, or figure out on their own how to comply. They will be
able to download business forms and conduct a myriad of other business
transactions. Currently on the World Wide Web, the U.S. Business Advisor is
still being developed. You are welcome to participate in this process
through a feedback mechanism at the web site. For information on how to
access the U.S. Business Advisor, see the section titled "For More
Information.".
Management-Assistance Aids
The SBA produces and maintains a library of management-assistance publi-
cations and videos, which are available at nominal costs. A complete
listing is available in the Resource Directory for Small Business Manage-
ment. To obtain a copy, call your SBA field office or the SBA Answer Desk.
Many of these publications are also available through the SBA OnLine
900-number.
Business Counseling and Training
Service Corps of Retired Executives (SCORE)
One of our most valuable resources is the Service Corps of Retired Execu-
tives. Nationwide, 13,000 SCORE volunteers in nearly 400 chapters provide
expert advice, based on their many years of firsthand experience and
shared knowledge, on virtually every aspect of business. SCORE counselors
are located at SBA field offices, business information centers and some
of the SBA's small business development centers. Call your local SBA office
to find the SCORE chapter nearest you.
Small Business Development Centers (SBDCs)
Funded and administered by the SBA, SBDCs provide a variety of management
and technical assistance to small businesses and would-be entrepreneurs.
They are a cooperative effort among the SBA, the academic community, the
private sector, and state and local governments. Together with the SBA's
certified development companies, they can help you prepare SBA loan
applications. Over 900 SBDCs, located primarily at colleges and universi-
ties, are in all 50 states. For the SBDC closest to you, please call your
local SBA office.
Business Information Centers (BICs)
Supported by its local SBA office, a business information center can assist
you in two ways - through access to state-of-the-art computer hardware and
software and through counseling by SCORE volunteers. To find out if there
is a BIC near you, call your SBA field office. You can also access a list
of BIC locations by dialing SBA OnLine.
Tribal Business Information Centers (TBICs)
There are currently 20 TBICs serving Native American reservation com-
munities in the states of Montana, North Dakota, South Dakota, Oregon
and the Navajo Nation. TBICs are SBA resource partners which offer
entrepreneurs access to state-of-the-art computer and software technology,
one-on-one business counseling services and business management workshops.
For location information contact the SBA Office of Native American Affairs
or dial SBA OnLine.
One-Stop Capital Shops (OSCSs)
The OSCSs are the SBA's contribution to the Empowerment Zones/Enterprise
Communities program, a federal interagency initiative that targets
resources to selected distressed communities to address an array of social
and economic needs. OSCSs provide access to a full range of SBA financial
and technical assistance programs as well as those of other federal
agencies, state and local governments, and the private sector.
Note: For special-focus business counseling and training, see the section
on Special-Focus Programs.
Lending Programs
The SBA provides financial assistance in the form of loan guaranties,
rather than direct loans. The SBA does not provide grants to start or
expand a business.
7(a) Loan Guaranty
This is the SBA's primary business loan program. Under 7(a), the SBA
guarantees loans to small businesses that cannot obtain financing on
reasonable terms through other channels. This program generally is used
to meet the varied short- and long-term needs of small businesses.
Lenders, not the SBA, approve and service the loans and request SBA
guaranties. The guaranties reduce risks to the lenders, expanding their
ability to make small business loans.
Loan proceeds from the 7(a) Program may be used for business start-ups,
expansion, equipment purchases, working capital, inventory or real-estate
acquisition. Generally, the SBA can guarantee up to $750,000 of a private-
sector loan; as much as 80 percent on loans of $100,000 or less and 75
percent on loans of more than $100,000. The interest rate may not exceed
2.75 percent over the prime lending rate except for loans under $50,000,
where the rates may be slightly higher. Maturities can extend to 10 years
for working capital and 25 years for fixed assets. For further information
on the 7(a) Program, contact your local SBA office.
There are a number of loan programs under the 7(a) Program that address
specific needs:
* Low Documentation Loan (LowDoc)
For small business loans of $100,000 or less, LowDoc features a one-
page SBA application, cutting the paperwork burden for both small
businesses and lending institutions. Once the applicant has satisfied
the lender's requirements, the lender and applicant together complete
the SBA's one-page guaranty application. If approved, the SBA
guarantees up to 80 percent of the loan, with a quick turnaround to
the lender.
* Women's Prequalification Loan
This program enables the SBA to prequalify a loan guaranty for a woman
business owner before she approaches a lender. The program focuses on
an applicant's character, credit, experience and reliability rather
than her collateral. An SBA-designated nonprofit intermediary, such as
an SBDC, works with a woman business owner to review and strengthen her
loan application. The review is based on key financial ratios, credit
history, business history and the proposed use of the proceeds. The
Women's Prequalification Loan Program is available through a number
of SBA district offices nationwide. To find out if this program is
available in your area or to find the SBA-designated nonprofit inter-
mediary nearest you, call your local SBA office.
* Minority Prequalification Loan
This pilot program is administered like the Women's Prequalification
Loan (see above). However, this program is designed for qualified
minority-owned companies and allows the use of for-profit intermedi-
aries. Contact your local SBA office to find your nearest SBA-
designated intermediary. This is a pilot program available at a
limited number of locations.
* CAPLines
CAPLines offers five types of loans to finance the short-term, cyclical
working-capital needs of small businesses. Under this program, loan
proceeds generally will be advanced against a borrower's existing or
anticipated inventory and/or accounts receivable.
* FA$TRAK
A new loan program, piloted with selected banks nationwide, FA$TRAK
provides additional incentive to lenders to make small business loans.
Participating banks use their own documentation and procedures to
approve, service and liquidate loans of up to $100,000. In return, the
SBA guarantees up to 50 percent of each loan.
* Export Working Capital Program (EWCP)
The EWCP provides short-term financing to small businesses for export-
related transactions. Proceeds from the export sales are the primary
source of repayment. Under the EWCP, the SBA guarantees up to 90 per-
cent of a secured loan or $750,000, whichever is less. Typically,
maturities match a single transaction cycle with a term of up to 18
months or support a line of credit with a term of up to 12 months.
* International Trade Loan (ITL)
This program provides short- and long-term financing to small
businesses involved in exporting, as well as businesses adversely
affected by import competition. The SBA can guarantee up to $1.25
million for a combination of fixed-asset financing and working
capital.
* Defense Loan and Technical Assistance (DELTA)
The DELTA Program provides both financial and technical assistance to
help defense-dependent small firms adversely affected by defense cuts
diversify into the commercial market. Loans must be used to retain jobs
of defense workers, create new jobs in impacted communities, or to
modernize or expand in order to remain in the national technical and
industrial base. Loans may be made under the 7(a) and/or 504 programs.
For information on the 504 Program, see below. The maximum loan amount
under DELTA is $1.25 million. The SBA also leverages federal, state and
private-sector resources to provide a full range of management and
technical assistance.
7(m) MicroLoan
The MicroLoan Program provides short-term loans ranging from under $100 to
$25,000 for small-scale financing purposes such as inventory, supplies and
working capital (but not to pay existing debts). Loans are made through over
100 SBA-approved nonprofit groups, which also provide the counseling and
educational assistance needed for success. Call your local SBA office to
locate the nearest SBA-designated group. This is a pilot program available
at a limited number of locations.
504 Certified Development Companies
The 504 Program provides long-term, fixed-asset financing through certified
development companies. These nonprofit organizations are sponsored by pri-
vate interests or by state and local governments. The SBA can guarantee
debentures covering as much as 40 percent of a 504 project, up to $1 mil-
lion. DELTA funding is also available under this program. For information
on the DELTA Program, see the section on Defense Loan and Technical
Assistance.
Certified and Preferred Lenders
The most active and expert lenders qualify for the SBA's Certified and
Preferred Lenders Program. Certified lenders receive a partial delegation
of authority to approve loans. Preferred lenders enjoy full delegation of
lending authority. A listing of participants in the Certified and Preferred
Lenders Program is available through the SBA's field offices.
Other Financial Assistance
Main Street Investment
Main Street Investment is a public/private partnership between the SBA and
state governments to make capital more available to lenders who, in turn,
make loans to small businesses. Participating states invest tax revenues in
those community banks that agree to make LowDoc loans. For information on
the LowDoc Program, see the section on Low Documentation Loan.
Small Business Investment Companies (SBICs)
Unique economic-development tools, SBICs put risk capital, in the form of
debt and equity financing, into small businesses for growth, modernization
and expansion. SBICs are privately owned and managed, for-profit investment
firms licensed by the SBA. They make equity investments and long-term loans
to small firms, using their own capital supplemented with SBA-guaranteed
debentures or participating securities.
Surety Bonds
By law, prime contractors to the federal government must post surety bonds
on federal construction projects valued at $100,000 or more. Many states,
counties, municipalities, and private-sector projects and subcontracts also
require surety bonds. The SBA can guarantee bid, performance and payment
bonds for contracts up to $1.25 million for eligible small businesses that
cannot obtain surety bonds through regular commercial channels. The SBA's
guaranty goes to the surety company, and contractors must apply through a
surety bonding agent.
When Business Problems Arise
When a small business encounters difficulties, the SBA is ready to help
with expert business counseling and assistance. In the event that a
borrower is unable to meet the obligations of an SBA loan, the SBA works
closely with the lender and/or borrower to negotiate a feasible solution.
Only if a loan workout is not possible will the SBA work to liquidate
the loan.
Advocacy
The Office of Advocacy serves as a direct link to the small business
community and as an advocate of small businesses. It identities perti-
nent issues, develops policy and legislation, and monitors their effect.
The Office of Advocacy produces numerous publications, including an annual
report to Congress, "The State of Small Business: A Report of the
President," as well as technical books and statistical and economic reports.
It compiles and interprets statistics on small business and is the primary
agency within the federal government that disseminates small business data.
Advocacy staff provides congressional testimony as well as public informa-
tion and outreach. It served as a policy resource for the 1995 White House
Conference on Small Business.
Special-Focus Programs
International Trade Assistance
U.S. Export Assistance Centers (USEACs)
USEACs combine in single locations the trade-promotion and export-finance
resources of the SBA, the U.S. Department of Commerce and the Export-Import
Bank of the United States to deliver their services to small- and medium-
sized businesses. They also work closely with other federal, state and local
international trade-assistance partners. To find out if there is a USEAC
near you, call your SBA field office.
Export Legal Assistance Network (ELAN)
ELAN provides free initial legal advice to exporters and would-be exporters.
To consult with an experienced trade attorney, contact your SBA field
office.
Export Access
This international market-research tool delivers free market-data reports
to your computer screen. Export Access provides both product and country
reports: The product report ranks the top 35 import and export markets for
a particular product; the country report identifies the top 20 import and
export products by country for the last five years. An on-screen graph
allows for easy identification of trends. Export Access is easily reached
via the Internet; it is found through the SBA Home Page. For information
on how to access the SBA Home Page, see the section titled For More
Information. Export Access is also available at local SBA offices nation-
wide.
Note: For information on loans for exporters, see the section titled
Export Working Capital Program (EWCP).
Research & Development Assistance
Small Business Innovation Research (SBIR)
Under the SBIR Program, small businesses propose innovative ideas that meet
the specific research and R&D needs of the federal government. The program
also promotes commercialization of the results generated. Awards are made
on a competitive basis.
Small Business Technology Transfer (STTR)
This pilot program requires the small firm competing for the R&D project to
collaborate with a nonprofit research institution from submission of the
proposal to completion of the designated effort. STTR awards are made on a
competitive basis.
Development of Disadvantaged Small Businesses
8(a) Business Development
The 8(a) Program assists the development of small firms owned and operated
by individuals who are both socially and economically disadvantaged. By
extending government contracting preferences and other business development
support, it helps these firms gain access to the economic mainstream.
Note: For information on the Minority Prequalification Loan, see the
section titled Minority Prequalification Loan.
Women Business Owners
Women's Demonstration Program
This program provides women with long-term training and counseling in all
aspects of owning or managing a business. There are 54 women's business
centers located in 28 states and the District of Columbia. Each center
tailors its services to the needs of the local business community. To find
the women's business center nearest you, contact your local SBA office.
Women's Network for Entrepreneurial Training (WNET)
Under WNET, seasoned women business owners serve as mentors to protges
ready to expand their businesses. Mentors share their knowledge and skills,
and provide support in a year-long, one-on-one relationship.
The WNET Roundtable provides mentoring and support for women business owners
in a group setting. Sponsors include small business development centers,
local business leaders, government representatives and SCORE.
Note: For additional information, see the section titled Women's Prequali-
fication Loan. For details on Women-Owned Business Procurement, see the
section titled Women-Owned Business Procurement.
U.S. Veteran Business Owners
Veterans' Entrepreneurial Training (VET)
The VET Program provides long-term (up to 12 months) in-depth entrepre-
neurial training to veterans. Workshops include accounting, marketing,
computer training, business-plan preparation and loan packaging. Up to
three workshop locations are funded each year.
Transition Assistance Program for Veterans (TAP)
Through this nationwide program, the SBA assists all military personnel who
are about to be discharged. The SBA provides in-depth business assistance
and guidance to those who wish to become entrepreneurs.
Note: For information on federal procurement opportunities for veterans,
see the section titled Opportunities for Veterans.
Conferences
Business opportunity conferences help veteran-owned companies and firms
impacted by military downsizing sell to federal government agencies and
prime contractors.
Technology transfer conferences assist defense-dependent firms adversely
affected by reductions in defense spending and non-defense-dependent small
firms interested in buying or selling technology.
Native American Business Owners
The SBA's Office of Native American Affairs (ONAA) develops initiatives that
ensure native individuals have access to business-development resources,
training and services in their communities. ONAA's main focus is economic
development and job creation through small business ownership and education.
ONAA works with individual and tribally owned organizations; other federal,
state and local agencies; nonprofit organizations; and national Native
American organizations.
Note: For additional information, see the section titled Tribal Business
Information Centers (TBICs).
Federal Government Procurement
Prime Contracting
This program increases opportunities for small businesses in the federal
acquisition process. It initiates small business set-asides, identifies new
small business sources and counsels small firms on how to do business with
the federal government. It also conducts surveillance reviews of federal
purchasing facilities to assess compliance with the Small Business Act.
Subcontracting Assistance
This program ensures that small businesses receive the maximum practical
opportunity to participate in federal contracts as subcontractors and
suppliers. (By law, certain percentages of large federal contracts must be
subcontracted to small businesses.)
Breakout Procurement
This program promotes, influences and enhances the breakout of historically
sole-source contracts for full and open competition in order to effect
significant savings to the federal government.
Procurement Automated Source System (PASS)
PASS is a nationwide computerized database of small businesses seeking
federal procurement opportunities. Information includes a summary of each
company's capabilities, ownership and qualifications. PASS applications are
available at your local SBA office; registration is free-of-charge.
Women-Owned Business Procurement
This is a multifaceted program aimed at teaching women to market to the
federal government. It also works to increase the pool of qualified women
business owners through procurement conferences held at major buying sites.
Opportunities for Veterans
This nationwide procurement program assists veteran-owned businesses. It
provides them (especially those impacted by defense downsizing) opportuni-
ties to sell products and services to the federal government and to federal
prime contractors.
Certificate of Competency (CoC)
The CoC Program provides an appeal process to low-bidding small businesses
that have been denied contracts with the U.S. government for a perceived
inability to perform satisfactorily.
Disaster Assistance
The SBA's Disaster Assistance Loan Program is the primary federal program
for funding long-range recovery for private-sector, nonagricultural
disaster victims. Assistance is available to businesses of all sizes and
to individuals. Eligibility is based on an individual's financial criteria;
interest rates fluctuate according to statutory formulas. A low interest
rate (not to exceed 4 percent) is available to applicants without credit
available elsewhere. A higher rate (not to exceed 8 percent) is available
for those with credit available elsewhere. The program provides disaster
loans when a declaration is made by the President or the SBA Administrator.
There are three disaster loan programs:
Loans for Businesses
Physical Disaster Business Loans: Loans are available to qualified
applicant businesses of any size, for uninsured losses up to $1.5 million,
to repair or replace business property to pre-disaster conditions. Loans may
be used to replace or repair real estate, equipment, fixtures and inventory,
and leasehold improvements.
Economic Injury Disaster Loans (EIDLs): Loans of up to $1.5 million are
available for small businesses that sustain economic injury as a direct
result of a disaster. These working-capital loans are made to businesses,
without credit available elsewhere, to help pay ordinary and necessary
operating expenses that would have been payable barring the disaster.
Note: The maximum loan amount is $1.5 million for EIDL and physical-
disaster business loans combined, unless the business meets the federal
criteria for a major source of employment. The $1.5 million limit can
be waived for businesses that employ 250 or more people in an affected
area.
Loans for Homes and Personal Property
Real Property: This is the major long-term recovery program for individual
disaster losses. Loans are available to qualified homeowners, for uninsured
losses up to $200,000, to repair or restore a primary residence to pre-
disaster condition.
Personal Property: Loans are available to qualified homeowner and renter
applicants for uninsured losses up to $40,000 to repair or replace personal
property, such as clothing, furniture, cars and so forth. Loans are not
intended to replace extraordinarily expensive or irreplaceable items, such
as antiques, pleasure crafts, recreational vehicles or fur coats.
For More Information
The SBA has offices located throughout the United States. For the one
nearest you, look under "U.S. Government" in your telephone directory,
or call the SBA Answer Desk at (800) 8-ASK-SBA. To send a fax to the
SBA, dial (202) 205-7064. For the hearing impaired, the TDD number is
(704) 344-6640.
To access the agency's electronic public information services, you may
call the following:
SBA OnLine:
electronic bulletin board - modem and computer required
(800) 697-4636 (limited access)
(900) 463-4636 (full access)
(202) 401-9600 (D.C. metro area)
Internet:
using uniform resource locators (URLs)
SBA Home Page:
http://www.sba.gov
SBA gopher:
gopher://gopher.sba.gov
File transfer protocol:
ftp://ftp.sba.gov
Telnet:
telnet://sbaonline.sba.gov
U.S. Business Advisor
http://www.business.gov
You also may request a free copy of The Resource Directory for Small
Business Management, a listing of for-sale publications and videotapes,
from your local SBA office or the SBA Answer Desk.
Other Sources
* State economic development agencies
* Chambers of commerce
* Local colleges and universities
* Libraries
* Manufacturers and suppliers of small business products and services
* Small business or industry trade associations
SBA Customer-Service Standards
As one of the first initiatives of this administration, President Clinton
and Vice President Gore challenged us to "reinvent" the SBA, to create an
agency that not only works better, but is smaller and costs less. The
best possible customer service is a key element of reinventing government,
and we at the SBA are committed to providing quality service at all our
service delivery points and to all our customers - small businesses,
lenders and resource partners, among others. We are establishing
"benchmarks" from the best of the business community and applying these
standards to our programs, monitoring our success and eliciting regular
feedback from our customers on our performance.
Specifically, we are committed to the following customer-service principles:
1. We will provide prompt, courteous and accurate responses to requests
for information received by telephone, in writing or in person.
2. We will continue to look for cost-effective and user-friendly ways
to make information easily accessible to the small business community.
3. We will continue to streamline and reinvent processes to make conduct-
ing business with the SBA easier for both our resource partners and
small business owners.
4. We will provide the small business owner with specialized technical
assistance through a variety of programs in a variety of locations.
5. We will continue to work to relieve the regulatory burden on small
business.
6. We will continue to facilitate and strengthen working relationships
between small contractors and federal procuring agencies.
Some Facts About The SBA And Small Business
Did You Know The SBA ...
* Has a portfolio guaranteeing over $27 billion in loans to
185,000 small businesses that otherwise would not have had
such access to capital?
* Guaranteed over 60,000 loans totaling $9.9 billion to America's
small businesses in fiscal year 1995?
* Last year extended management and technical assistance to nearly
one million small businesses through its 950 Small Business
Development Centers and 13,000 Service Corps of Retired Executives
volunteers?
* Provided more than 45,000 loans totaling $1.2 billion to disaster
victims for residential, personal property, as well as business
losses in fiscal year 1995?
* Has 7,000 private sector lenders as partners providing their
capital to small business?
* Has increased its venture capital program with more private capital
in the past two years than in the previous 15 years combined?
* Provides loan guaranties and technical assistance to small business
exporters through U.S. Export Assistance Centers in 15 cities?
* Can respond to written small business questions through the U.S.
Business Advisor on the Internet (http://www.business.gov)?
Did You Know That America's 22 Million Small Businesses ...
* Employ more than 50 percent of the private workforce,
* Generate more than half of the nations's Gross Domestic Product, and
* Are the principal source of new jobs?
All of the SBA's programs and services are provided to the public on a
nondiscriminatory basis.
Alphabetical Listing of SBA Field Offices
by State and City:
AK Anchorage
AL Birmingham
AR Little Rock
AZ Phoenix
CA Fresno
Glendale
Sacramento
San Diego
San Francisco
Santa Ana
CO Denver
CT Hartford
DC Washington, D.C.
DE Wilmington
FL Coral Gables
Jacksonville
GA Atlanta
HI Honolulu
IA Cedar Rapids
Des Moines
ID Boise
IL Chicago
Springfield
IN Indianapolis
KS Wichita
KY Louisville
LA New Orleans
MA Boston
Springfield
MD Baltimore
ME Augusta
MI Detroit
Marquette
MN Minneapolis
MO Kansas City
St. Louis
Springfield
MS Gulfport
Jackson
MT Helena
NC Charlotte
ND Fargo
NE Omaha
NH Concord
NJ Newark
NM Albuquerque
NV Las Vegas
NY Buffalo
Elmira
Melville
New York City
Rochester
Syracuse
OH Cincinnati
Cleveland
Columbus
OK Oklahoma City
OR Portland
PA Harrisburg
King of Prussia
Pittsburgh
Wilkes-Barre
PR Hato Rey
RI Providence
SC Columbia
SD Sioux Falls
TN Nashville
TX Corpus Christi
El Paso
Fort Worth
Harlingen
Houston
Lubbock
San Antonio
UT Salt Lake City
VA Richmond
VT Montpelier
WA Seattle
Spokane
WI Madison
Milwaukee
WV Charleston
Clarksburg
WY Casper
In addition to the above listing of SBA field offices, there are over 900
small business development center locations and nearly 400 SCORE offices to
help you start and/or strengthen your business.
CO 0002 (10/96)
----------
RESOURCE DIRECTORY FOR SMALL BUSINESS MANAGEMENT 12/96
DIRECTORY OF SBA PUBLICATIONS NOW AVAILABLE FOR PURCHASE
EMERGING BUSINESS SERIES
TRANSFERRING MANAGEMENT/FAMILY BUSINESSES
Help your family business successfully survive the transfer of ownership
from generation to generation. Proper planning is the key.
Item # EB01 $3.00
MARKETING STRATEGIES FOR GROWING BUSINESSES
Unravel the mystery of marketing -- putting the customer first -- and
discover practical marketing approaches to budgeting, layout and design,
copy-writing, media analysis and more.
Item # EB02 $4.00
MANAGEMENT ISSUES FOR GROWING BUSINESSES
Learn to examine the marketplace environment and create employment and
profit opportunities that provide growth and financial viability to your
business through effective management.
Item # EB03 $3.00
HUMAN RESOURCE MANAGEMENT FOR GROWING BUSINESSES
Uncover the characteristics of an effective personnel system and training
program. Learn how these functions come together to build employee trust
and productivity.
Item # EB04 $3.00
AUDIT CHECKLIST FOR GROWING BUSINESSES
Designed with the small business in mind, this audit checklist helps the
entrepreneur conduct a comprehensive search for existing and potential
problems and opportunities.
Item # EB05 $4.00
STRATEGIC PLANNING FOR GROWING BUSINESSES
Strategic planning is not just for big business. Learn to effectively
match your business' strengths to available opportunities by developing a
clear mission statement, goals and objectives.
Item # EB06 $3.00
FINANCIAL MANAGEMENT FOR GROWING BUSINESSES
Develop a comprehensive financial plan outlining the assets, debts and
current and future profit potential of your business through effective
financial management.
Item # EB07 $4.00
FINANCIAL MANAGEMENT
ABC's OF BORROWING
This best seller tells you what lenders look for and what to expect when
borrowing money for your small business.
Item # FM01 $3.00
ElEMENTOS BASICOS PARA PEDIR DINERO PRESTADO
Esta publicacion le da a conocer lo que los prestatarios buscan y lo que
esperan de usted cuando pide dinero prestado para su pequeno negocio.
Item # FM01s $3.00
UNDERSTANDING CASH FLOW
The owner/manager is shown how to plan for the movement of cash through the
business and thus plan for future requirements.
Item # FM04 $3.00
A VENTURE CAPITAL PRIMER FOR SMALL BUSINESS
Learn what venture capital resources are available and how to develop a
proposal for obtaining these funds.
Item # FM05 $2.00
BUDGETING IN A SMALL SERVICE FIRM
Learn how to set up and keep sound financial records. Study how to
effectively use journals and ledgers and charts to increase profits.
Item # FM08 $3.00
RECORDKEEPING IN A SMALL BUSINESS
Need some basic advice on setting up a useful record keeping system? This
publication describes how.
Item # FM10 $3.00
PRICING YOUR PRODUCTS AND SERVICES PROFITABLY
Discusses how to price your products profitably, plus various pricing
techniques and when to use them.
Item # FM13 $3.00
FINANCING FOR SMALL BUSINESS
Learn how , when and where to find capital for business needs including
step-by-step instructions.
Item # FM14 $3.00
MANAGEMENT AND PLANNING
PROBLEMS IN MANAGING A FAMILY-OWNED BUSINESS
Specific problems exist when attempting to make a family-owned business
successful. This publication offers suggestions on how to overcome these
difficulties.
Item # MP3 $3.00
BUSINESS PLAN FOR SMALL MANUFACTURERS
Designed to help an owner/manager of a small manufacturing firm, this
publication covers all the basic information necessary to develop an
effective business plan.
Item # MP04 $3.00
BUSINESS PLAN FOR SMALL CONSTRUCTION FIRMS
This publication is designed to help an owner/manager of a small
construction company pull together the resources to develop a business
plan.
Item # MP05 $3.00
PLANNING AND GOAL SETTING FOR SMALL BUSINESS
Learn proven management techniques to help you plan for success.
Item # MP06 $3.00
BUSINESS PLAN FOR RETAILERS
Business plans are essential road maps for success. Learn how to develop
a business plan for a retail business.
Item # MP09 $3.00
BUSINESS PLAN FOR SMALL SERVICE FIRMS
Outlines the key points to be included in the business plan of a small
service firm.
Item # MP11 $4.00
CHECKLIST FOR GOING INTO BUSINESS
This is a must if you're thinking about starting a business. It highlights
the important factors you should know in reaching a decision to start your
own business.
Item # MP12 $3.00
LISTA PARA COMENZAR SU NEGOCIO
Esta publicacion es necesaria si usted est pensando en comenzar un
negocio. Demuestra los factores importantes que usted debebe de conocer
antes de tomar la decision de comenzar su propio negocio.
Item # MP12s $3.00
HOW TO GET STARTED WITH A SMALL BUSINESS COMPUTER
Helps you forecast your computer needs, evaluate the alternatives and
select the right computer system for your business.
Item # MP14 $3.00
BUSINESS PLAN FOR HOME-BASED BUSINESS
Provides a comprehensive approach to developing a business plan for a
home-based business.
Item # MP15 $4.00
HOW TO BUY OR SELL A BUSINESS
Learn several techniques for determining the best price to buy or sell a
small business.
Item # MP16 $3.00
DEVELOPING A STRATEGIC BUSINESS PLAN
This best seller helps you develop a strategic action plan for your small
business.
Item # MP21 $3.00
INVENTORY MANAGEMENT
Discusses the purpose of inventory management, types of inventories, record
keeping and forecasting inventory levels.
Item # MP22 $2.00
SELECTING THE LEGAL STRUCTURE FOR YOUR BUSINESS
Discusses the various legal structures that a small business can use in
setting up operations. It identifies types of legal structures and the
advantages and disadvantages of each.
Item # MP25 $2.00
EVALUATING FRANCHISE OPPORTUNITIES
Evaluate franchise opportunities and select the business that's right for
you.
Item # MP26 $2.00
SMALL BUSINESS RISK MANAGEMENT GUIDE
This guide can help you strengthen your insurance program by identifying,
minimizing and eliminating business risks.
Item # MP28 $3.00
CHILD DAY-CARE SERVICES
An overview of the industry, including models of day-care operations.
Item # MP30 $3.00
HANDBOOK FOR SMALL BUSINESS
Handy information for getting started - in a new publication developed by
the SBA's Service Corps of Retired Executives (SCORE).
Item # MP31 $4.00
HOW TO WRITE A BUSINESS PLAN
What you need to know to write a good plan at the start. It can save your
business dow the line.
Item # MP32 $3.00
MARKETING
CREATIVE SELLING: THE COMPETITIVE EDGE
Explains how to use creative selling techniques to increase profits.
Item # MT01 $2.00
MARKETING FOR SMALL BUSINESS: AN OVERVIEW
Provides an overview of marketing concepts and contains an extensive
bibliography of sources covering the subject of marketing.
Item # MT02 $2.00
RESEARCHING YOUR MARKET
Learn inexpensive techniques that you can apply to gather facts about your
customer base and how to expand it.
Item # MT08 $3.00
SELLING BY MAIL ORDER
Provides basic information on how to run a successful mail order business.
Includes information on product selection, pricing testing and writing
effective advertisements.
Item # MT09 $3.00
ADVERTISING
Advertising is critical to the success of any small business. Learn how
you can effectively advertise your products and services.
Item # MT11 $3.00
PRODUCTS/IDEAS/INVENTIONS
IDEAS INTO DOLLARS
This publication identifies the main challenges in product development and
provides a list of resources to help inventors and innovators take their
ideas into the marketplace.
Item # PI01 $3.00
AVOIDING PATENT, TRADEMARK AND COPYRIGHT PROBLEMS
Learn how to avoid infringing the rights of others and the importance of
protecting your own rights.
Item # PI02 $3.00
PERSONNEL MANAGEMENT
EMPLOYEES: HOW TO FIND AND PAY THEM
A business is only as good as the people in it. Learn how to find and hire
the right employees.
Item # PM02 $3.00
VIDEOTAPES
Each VHS videotape below comes complete with a workbook.
MARKETING: WINNING CUSTOMERS WITH A WORKABLE PLAN
Take advantage of this easy-to-follow course and develop the marketing plan
designed to meet your goals. Developed by two of the country's leading
small business marketing experts, this hands-on program offers a
step-by-step approach to writing the best possible marketing plan for your
business.
Item # VT01 $27.00
THE BUSINESS PLAN: YOUR ROAD MAP TO SUCCESS
Learn the essentials of developing a business plan that will lead you to
capital, growth and profitability. This video teaches you what to include,
what to omit, and how to get free help from qualified consultants when
developing your business plan.
Item # VT02 $27.00
PROMOTION SOLVING THE PUZZLE
Master the components that make a successful promotional campaign --
advertising, public relations, direct mail and trade shows. This videotape
shows you how to put the pieces together. Learn how to choose the best
advertising medium for your needs, and much more.
Item # VT03 $27.00
HOME-BASED BUSINESS: A WINNING BLUEPRINT
This practical program examines the essentials of operating within a
productive and profitable home-based business -- from designing your home
office and avoiding isolation to networking strategies and building an
image that gets you taken seriously.
Item # VT04 $27.00
BASICS OF EXPORTING
This videotape shows you how to open the doors to international markets.
This tape provides information on: getting your goods overseas, payment
mechanisms, selling and distributing overseas, international marketing and
sources of financial assistance.
Item # VT05 $27.00
For more information about SBA economic development programs and services
or for a free copy of the "The Small Business Directory," consult the
U.S. government section in your telephone directory for the SBA office
nearest you.
Small Business Answer Desk
1-800-827-5722
All of SBA's programs and services are extended to the public on a
nondiscriminatory basis.
Complete the order form below. Please allow 4-6 weeks to receive your
order.
SHIP TO:
__________________________
NAME
__________________________
STREET ADDRESS
__________________________
CITY, STATE, ZIP CODE
__________________________
DAYTIME PHONE NUMBER
INCLUDING AREA CODE
PAYMENT REQUIREMENTS:
Return this order form with a CHECK or MONEY ORDER to:
SBA Publications
P.O. Box 46521
Denver, Colorado 80201-0030
Make CHECK or MONEY ORDER payable in U. S. dollars to: U. S. Small Business
Administration
- U. S. DOLLARS ONLY
- NO FOREIGN FUNDS
- NO CASH
- NO PURCHASE ORDERS
- NO INVOICES
Revised October 1996. Former versions obsolete. This
Directory Expires: January 30, 1998
----------
Handicapped Assistance Loan Program
Note: The SBA has not been provided funding for direct
handicapped assistance loans, but such individuals are eligible
for all SBA loan guaranty programs.
SBA has special loan programs for businesses owned and operated either
by or for handicapped individuals. A handicapped individual is defined as
one who has a physical, mental or emotional handicap which is of a
permanent nature and which limits the individual from engaging in the
proposed business activity on an even basis with non-handicapped
competitors.
The HAL-1 Loan Program provides direct loans and guaranteed loans to
public and private nonprofit sheltered workshops which operate in the
interest of handicapped individuals. At least 75 percent of the business
operation's staff hours must be provided by handicapped individuals. There
is no size standard for this program, but the workshop must demonstrate the
experience and capability to provide a marketable service or product and to
repay the loan.
The HAL-2 Loan Program provides direct loans and guaranteed loans to
profit-making small businesses which are 100 percent owned and operated by
handicapped individuals. The business, as well as the handicapped
individual, must also meet SBA's other size and policy requirements.
The interest rate on direct HAL loans is set by law at 3 percent; on
guaranteed HAL loans it is the same as for all other guaranteed loans.
----------
SECTION 8(a) PROGRAM ELIGIBILITY CRITERIA 6/95
SOURCE: 13 CODE OF FEDERAL REGULATIONS
Part 124
Public Law 100-656
Public Law 100-574
The Office of Minority Enterprise Development (MED) Program was
created to assist socially and economically disadvantaged
business persons to gain access to the resources necessary to
develop small businesses and improve their ability to compete in
the mainstream of the American economy.
The most well known element of the MED program is the 8(a)
Program, named from Section 8(a) of the Small Business Act. The
8(a) Program is a business development program that provides its
participants access to a variety of business development
services, including the opportunity to receive federal contracts
on a sole-source or limited competition basis. Under the 8(a)
Program, SBA enters into prime contracts with federal departments
and agencies and subcontracts the performance of work to
disadvantaged small businesses that are certified participants in
the program.
THE SECTION 8(A) PROGRAM
SMALL BUSINESS:
A firm must qualify as a small business as defined in Part
121 of SBA Rules and Regulations. The particular size
standard to be applied will be based on the primary industry
classification of the applicant firm.
OWNERSHIP:
A firm must be at least 51 percent unconditionally owned by
an individual(s) who is a citizen of the United States and
who is determined by SBA to be socially and economically
disadvantaged.
a. In the case of a partnership, 51% of the partnership
interest must be unconditionally owned by an
individual(s) determined by SBA to be socially
and economically disadvantaged. Such unconditional
ownership must be reflected in the firm's partnership
agreement.
b. In the case of a corporation, 51% of each class of
voting stock and 51% of the aggregate of all
outstanding shares of stock must be unconditionally
owned by an individual(s) determined by SBA to be
socially and economically disadvantaged.
c. SBA does not consider a firm to be unconditionally
owned if socially and economically disadvantaged
individual(s) claim ownership of a firm based on
unexercised stock options or other arrangements.
d. When determining ownership of a firm for 8(a) program
eligibility, SBA considers options to purchase stock
held by non-disadvantaged individuals or entities. The
right to convert non-voting stock or debentures held by
non-disadvantaged individuals or entities into
exercised voting stock is also be considered. However,
potential ownership interests (such as options or
warrants) held by investment companies licensed under
the Small Business Investment Act 1958 shall not be
treated as ownership interests until exercised.
e. The individual(s) upon whom eligibility is based must
receive at least 51% of the annual distribution of
dividends paid on the voting stock of a corporate
applicant firm.
In the event that the stock is sold, the individual(s)
upon whom eligibility is based must be entitled to
receive 100% of the value of each share of stock in
his/her possession.
In the event of dissolution of the corporation, the
individual(s) upon whom eligibility is based must be
entitled to receive at least 51% of the retained
earnings of the firm and 100% of the value of each
share of stock in his/her possession.
f. One 8(a) firm may not hold more than a 10% equity
ownership interest in any other 8(a) firm.
g. An individual in an 8(a) firm, whether or not
disadvantaged, is prohibited from simultaneously
holding an equity ownership interest exceeding 10% in
another 8(a) firm. An entity who/which is a partner,
stockholder, officer and/or director is also
prohibited. Partners or shareholders that are financial
institutions licensed or chartered by Federal, state or
local government, including investment companies
licensed under the Small Business Investment Act of
1958, shall not hold ownership interest in an 8(a)
firm exceeding 49%.
h. A non-8(a) firm in the same or similar line of
business is prohibited from having an equity ownership
interest in an 8(a) firm which exceeds 10%.
i. With prior SBA approval, an 8(a) firm may continue
participation in the program after a change of
ownership. Prior SBA approval is not required when the
change in ownership represents less than a 10% interest
in the firm or results from the death or incapacity due
to serious or long-term illness or injury of a
disadvantaged principal. However, the firm shall
notify SBA as soon as possible.
j. A program participant's request for SBA's approval for
the issuance of a public offering is treated as a
request for a change in ownership and SBA examines
the firm's continued need for access to the business
development resources of the 8(a) program.
CONTROL AND MANAGEMENT:
The management and daily business operations of a firm must
be controlled by an owner(s) of the firm who has (have) been
determined to be socially and economically disadvantaged.
For disadvantaged individual to control the firm, that
individual must have managerial or technical experience and
competency directly related to the primary industry in which
the firm is seeking 8(a) certification.
The firm must be managed on a full-time basis by one or more
individuals who are socially and economically disadvantaged.
Such person(s) must possess requisite management or
technical capabilities as determined by SBA. For those
industries requiring professional licenses, SBA determines
that the firm or individuals employed by the firm hold(s)
the requisite license(s).
At least one socially and economically disadvantaged full-
time manager must hold the position of President or Chief
Executive Officer. This precludes outside employment or
other business interest by the individual which conflicts
with the management of the firm or hinders it in achieving
the objectives of its business development plan.
(1) A non-disadvantaged individual as an officer or member
of the Board of Directors of the 8(a) firm, or
through stock ownership, has the power to control day-
to-day direction of the business affairs of the
firm.
(2) The non-disadvantaged individual or entity provides
critical financial or bonding support or licenses to
the 8(a) firm which directly or indirectly allows
the non-disadvantaged individual to gain control or
direction of the 8(a) firm.
(3) A non-disadvantaged individual or entity exercises
voting control of the participant through a nominee(s).
(4) A non-disadvantaged individual or entity controls the
corporation or the individual disadvantaged owners
through loan arrangement.
(5) Other contractual relationships exist with non-
disadvantaged individual or entities, the terms of
which would create control over the disadvantaged
concern.
SOCIAL DISADVANTAGE:
Socially disadvantaged individuals are those who have been
subjected to racial or ethnic prejudice or cultural bias
because of their identities as members of groups without
regard to their individual qualities. The social
disadvantage must stem from circumstances beyond their
control.
In the absence of evidence to the contrary, the following
individuals are presumed to be socially disadvantaged:
Black Americans, Hispanic Americans, Native Americans
(American Indians, Eskimos, Aleuts or Native Hawaiians);
Asia, Pacific Americans (person with origins from Burma,
Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan,
China, Taiwan, Laos, Cambodia, Kampuchea, Vietnam, Korea,
the Philippines, U.S. Trust Territory of the Pacific
Islands, Republic of Palau, Republic of the Marshall
Islands, Federated States of Micronesia, the Commonwealth of
the Northern Mariana Islands, Guam, Samoa, Macao, Hong Kong,
Fiji, Tonga, Kiributi, Tuvalu, or Nauru); Subcontinent Asian
Americans (persons with origins from India, Pakistan,
Bangladesh, Sri Lanka, Bhutan, the Maldives Islands or
Nepal); and members of other groups designated from
time-to-time by SBA.
An individual seeking socially disadvantaged status as a
member of a designated group may be required to demonstrate
that he/she holds himself/herself out and is identified as a
member of a designated group if SBA has reason to question
such individual's status as a group member.
An individual who is not a member of one of the above-named
groups must establish his/her individual social disadvantage
on the basis of clear and convincing evidence. A clear and
convincing case of social disadvantage must include the
following elements:
1. The individual's social disadvantage must stem from his
or her color, ethnic origin, gender, physical handicap,
long-term residence in an environment isolated from the
mainstream of American society, or other similar cause
not common to small business persons who are not
socially disadvantaged.
2. The individual must demonstrate that he or she has
personally suffered social disadvantage, not merely
claim membership in a non-designated group which could
be considered socially disadvantaged.
3. The individual's social disadvantage must be rooted in
treatment which he or she has experienced in American
society, not in other countries.
4. The individual's social disadvantage must be chronic
and substantial, not fleeting or insignificant.
5. The individual's social disadvantage must have
negatively impacted on his or her entry into and/or
advancement in the business world. SBA considers any
relevant evidence in assessing this element of an
applicant's case. SBA particularly considers and
places emphasis on the following experiences of the
individual, where relevant:
Education. SBA considers, as evidence of an
individual's social disadvantage, denial of equal
access to institutions of higher education; exclusion
from social and professional association with students
and teachers; denial of educational honors; social
patterns or pressures which have discouraged the
individual from pursuing a professional or business
education; and other similar factors.
Employment. SBA considers, as evidence of an
individual's social disadvantage, discrimination in
hiring, promotions and other aspects of professional
advancement; discrimination in pay and fringe benefits;
discrimination in other terms and conditions of
employment; retaliatory behavior by an employer; social
patterns or pressures which have channelled the
individual into nonprofessional or non-business fields;
and other similar factors.
The socially and economically disadvantaged individual(s)
upon whom eligibility is based shall control the Board of
Directors of a firm, either in actual numbers of voting
directors or through weighted voting. All voting rights of
the Board of Directors must comply with applicable state
law.
Individuals who are not socially and economically
disadvantaged may be involved in the management of an firm
and may be stockholders, partners, officers, and/or
directors of such firm. Such individual(s), their spouses
or immediate family members who reside in the individual's
household may not however:
1. Exercise actual control or have the power to control
the applicant or 8(a) firm.
2. Be an officer or director or more than a 10% owner,
stockholder, or partner of another firm in the same or
similar line of business as the applicant firm.
3. Receive excessive compensation from the applicant or
8(a) firm as directors, officers or employees.
Individual compensation from the firm in any form,
including dividends paid to a non-disadvantaged owner,
his/her spouse or immediate family member residing in
the same household, is deemed excessive if it exceeds
the compensation received by the Chief Executive
Officer or the President. However, with SBA's
approval, the Chief Executive Officer or President may
elect to the take a lower salary than such a
non-disadvantaged individual if it is demonstrated to
be in the best interest of the applicant or 8(a) firm.
4. Be former employers of the disadvantaged owner(s)
of the applicant or 8(a) firm unless it is determined
by the AA/MED that the contemplated relationship
between the former employer and the disadvantaged
individual or firm does not give the former actual
control or the potential to control the individual or
8(a) firm and such relationship is in the best
interests of the 8(a) firm.
5. Have an equity ownership interest of more than 10%
in another 8(a) firm.
Non-disadvantaged individuals or entities may be found
to control or have the power to control in any of the
following circumstances, which are illustrative only
and not all inclusive:
Non-disadvantaged individuals control the voting
Board of Directors of the 8(a) firm. Control can
be directly through majority voting membership or
indirectly if the by-laws allow non-disadvantaged
individuals to block any action proposed by the
disadvantaged individuals through negative
control. For example, any equal number of
disadvantaged an non-disadvantaged voting
directors could create negative control.
ECONOMIC DISADVANTAGE:
For purposes of the 8(a) program, economically disadvantaged
individuals are socially disadvantaged individuals whose
ability to compete in the free enterprise system has been
impaired due to diminished capital and credit opportunities.
In determining economic disadvantage for purposes of 8(a)
program eligibility, SBA compares the firm's business and
financial profile with profiles of businesses in the same or
similar line of business which are not owned and controlled
by socially and economically disadvantaged individuals.
In determining the degree of diminished credit and capital
opportunities of a socially disadvantaged individual, SBA
considers factors relating both to the firm and to the
individual. An individual whose personal net worth exceeds
$250,000.00 is not considered economically disadvantaged for
purposes of 8(a) program entry. When SBA calculates the
personal net worth of an individual claiming disadvantaged
status for purposes of the 8(a) program, SBA excludes the
individual's ownership interest in the applicant or
participating 8(a) firm and the equity in his/her primary
personal residence. However, any portion of such equity in
his/her primary residence attributable to excessive
withdrawals from the applicant or participating 8(a) firm is
not excluded.
POTENTIAL FOR SUCCESS:
A firm must demonstrate that it has been in business in the
primary industry classification in which it seeks 8(a)
certification for two full years prior to the date of its
8(a) application by submitting income tax returns showing
revenues for each of the two previous years.
To determine whether a firm has the potential for
success, SBA evaluates technical and managerial
experience and competency of the individual(s) upon whom
eligibility is based, the financial capacity of the
applicant firm and the firm's record of performance
on previous Federal and private sector contracts in the
primary industry in which the firm is seeking 8(a)
certification.
ADDITIONAL REQUIREMENTS:
Individual character review of the applicant(s). Standards
of conduct applies to SBA employees and former employees.
Manufacturers and regular dealers must meet the requirements
of the Walsh-Healey Public Contracts Act in its primary
industry classification. Immediate family members living in
the same household may not each use their individual
disadvantaged status to qualify more than one business
firm for 8(a) Program Participation if the firms are
in the same or similar line of business.
INELIGIBLE BUSINESSES:
Brokers and Packagers
Franchises
Debarred or suspended person or firm
Non-profit Organizations
Concerns owned by other disadvantaged firms
TWO-YEAR RULE
Public Law 101-574 allows a waiver of the two-year in business
requirement for participation in the 8(a) program when the
following criteria are met:
A. The individual(s) upon whom eligibility is
based have substantially demonstrated business
management experience;
B. The applicant has demonstrated technical expertise to
carry out its business plan with a substantial
likelihood for success;
C. The applicant has adequate capital to carry out the
business plan;
D. The applicant has a record of successful performance on
contracts from governmental and nongovernmental sources
in the primary industry category in which the applicant
is seeking program certification; and
E. The applicant has, or can demonstrate the ability to
obtain the personnel, facilities, equipment, and any
other requirements needed to perform such contracts.
----------
THIRTY MOST ASKED QUESTIONS ABOUT SMALL BUSINESS
1. Do I have what it takes to own/manage a small business?
You will be your own most important asset, so an
objective appraisal of your strengths and weaknesses is
essential. To determine if you have what it takes, YOU need to
answer some questions about yourself: Am I a self-starter? How
well do I get along with a variety of personalities? How good am
I at making decisions? Do I have the physical and emotional
stamina to run a business? How well do I plan and organize? Are
my attitudes and drive strong enough to maintain motivation? How
will the business affect my family?
2. What business should I choose?
Usually, the best business for you is the one in which you
are most skilled and interested. For example, if you are trained
as an auto mechanic, you may want to consider opening a shop
related to auto repair. As you review your options, it is
advisable to consult local experts and business persons about the
growth potential of various businesses in your area. Matching
your background with the local market characteristics will
increase your chance of success.
NOTE: If you don't have an idea of what type of business you wish
to start, consider visiting with one of SBA's major training and
counselling resources:
* SCORE -- Service Corps of Retired Executives
* BICs -- Business Information Centers
* SBDC -- Small Business Development Centers.
Locations of these resources are found under the Local
Information Section of SBA ONLINE.
3. What is a business plan and why do I need one?
A business plan precisely defines your business, identifies
your goals and serves as your firm's resume. Its basic
components include a market study, marketing/promotional
strategy, current balance sheet, an income statement
and a cash flow analysis. It helps you allocate resources
properly, handle unforeseen complications, and make the right
decisions. Because it provides specific and organized
information about your company and how you will repay borrowed
money, a good business plan is a crucial part of any loan
package. Additionally, it can tell your sales personnel,
suppliers and others about your operations and goals.
NOTE: A complete online training module on how to develop a
business plan can be found in the TRAINING MENU of SBA ONLINE.
4. Why do I need to define my business in detail?
It may seem silly to ask yourself, "What business am I
really in," but some owner-managers have gone broke because they
never answered that question. One watch store owner realized
that most of his time was spent repairing watches while most of
his money was spent selling them. He finally decided he was in
the repair business and discontinued the sales operations. His
profits improved dramatically. Clearly defining your business or
your purpose will give a true sense of direction as your venture
develops.
5. What legal aspects do I need to consider?
Licenses, permits, zoning laws and other regulations vary
from business to business and from state to state. You will need
to consider requirements of the Americans With Disabilities Act
in order to accommodate needs of your customers and your
employees. Your local Small Business Administration (SBA) office
and/or chamber of commerce can provide you with general
information, but you will need to consult your attorney for
advice specific to your enterprise and area. You also must
decide about your form of organization (corporation, partnership
or sole proprietorship).
6. What do I need to succeed in a business?
There are four basic needs for success in small business:
*Sound management practices.
*Industry experience.
*Technical support.
*Planning ability.
Few people start a business with all of these bases covered.
Honestly assess your own experience and skills; then look for
partners or key employees to compensate for your deficiencies.
7. Would a partner(s) make it easier to be successful?
A business partner does not guarantee success. If you
require additional management skills or start-up capital,
engaging a partner may be your best decision. Personality and
character, as well as ability to give technical or financial
assistance, determine the ultimate success of a partnership. A
successful partnership usually occurs when partners compliment
each other so that one's weakness is another's strength. If you
decide a partner is a good idea, make certain each of you has a
clear, written understanding of your responsibilities and your
rights.
8. How can I hire qualified employees?
Choose your employees carefully. Decide beforehand what you
want them to do. Be specific. You may need flexible employees
who can shift from task to task as required. Interview and screen
applicants with care. Remember, good questions lead to good
answers. The more you learn about each applicant's experience
and skills, the better prepared you are to make your decision.
9. How do I set wage levels?
Wage levels are calculated using position importance and
skill requirements as criteria. Consult your trade association
and accountant to learn the most current practices, cost ratios
and profit margins in your business field. While there is a
minimum wage set by federal law and by some states for most jobs,
the actual wage paid is entirely between you and your prospective
employee.
10. What other financial responsibilities do I have for
employees?
You must withhold federal and state income taxes from all
wages and salaries, contribute to unemployment and workers
compensation systems, and match Social Security contributions.
You may also wish to inquire about key employee life or
disability insurance. Because laws on these matters vary from
state to state, you should consult local information sources
and/or SBA offices.
NOTE: A list of all SBA offices can be found under the Local
Information section of SBA ONLINE.
11. What kind of security measures must I take?
Crimes ranging from armed robbery to embezzlement can
destroy even the best businesses. You should install a good
physical security system. Just as important, you must establish
policies and safeguards to ensure awareness and honesty among
your personnel. Because computer systems can be used to defraud
as well as keep records, you should check into a computer
security program. Consider taking seminars on how to spot and
deter shoplifting and how to handle cash and merchandise; it is
time and money well spent. Finally, careful screening when
hiring can be your best ally against crime.
Also consider developing a plan for coping with disaster as
part of your security measures. It is impossible to predict when
fire, flood, earthquake, tornado, explosion or other disaster
will strike. Being prepared -- with a spare set of essential,
regularly updated business records kept off premises -- can spell
the difference between WHEN or IF you will reopen for business
after the emergency is controlled.
12. Should I hire family members to work for me?
Frequently, family members of the owner "help out in the
business." For some small business owners it is a rewarding
experience; for others it can cause irreparable damage. Carefully
consider their loyalty and respect for you as the owner-manager.
A question of paramount importance that you must be able to
answer: Can you keep your family and business decisions separate?
13. Do I need a computer?
Small businesses today face growing inventory requirements,
increased customer expectations, rising costs and intense
competition. Moreover, if you plan to do business with the
federal government you will need electronic commerce capability.
Computers can provide information that leads to better returns on
investment. At the same time, they help you cope with the many
other pressures of your business. Computers are not cure-alls,
however, and considerable care should be given to:
(1) deciding if you need one,
(2) selecting the best system (or personal computer)
for your business,
(3) selecting the most relevant software for your
needs, and
(4) ensuring that you can easily operate the system.
14. What about telecommunications?
All small businesses share some common functions: sales,
purchasing, financing, operations and administration. Depending
on your individual business, telecommunications can support your
objectives in any or all of these areas. The telephone (the
terminal) and the network (local or long distance or INTERNET)
make up the basic components of a telecommunications system.
These are effective tools that can easily adapt to changes in
seasonality and growth. How you use telecommunications can
affect how efficiently and profitably your company grows in the
future.
15. How much money do I need to get started?
Once you have taken care of your building and equipment
needs you also must have enough money on hand to cover operating
expenses (fixed and variable costs) for at least one year. These
expenses include your salary, as the owner, and money to repay
your loans. One of the leading causes of business failure is
insufficient start-up capital. Consequently, you should work
closely with your accountant to estimate your cash flow needs.
Writing a business plan will provide you with accurate
information on your needs for capital.
16. What are the alternatives in financing a business?
Committing your own funds is often the first financing step.
It is certainly the best indicator of how serious you are about
your business. Risking your own money gives confidence to others
who may invest in your business. You may want to consider
family members or a partner for additional financing. Banks are
an obvious source of funds. Other loan sources include
commercial finance companies, venture capital firms, local
development companies and life insurance companies. Trade
credit, selling stock and equipment leasing offer alternatives to
borrowing. Leasing, for example, can be an advantage because it
ties up less of your cash. Ask your local SBA office for
information about these various sources as well as materials
produced by SBA including business management publications.
NOTE: A list of banks which frequently work with SBA in providing
loans to small businesses can be found in the Local Information
section of SBA ONLINE.
17. What do I have to do to get a loan?
Initially, the lender will ask three questions:
*How will you use the loan proceeds?
*How much do you need to borrow?
*How will you repay the loan?
When you apply for a loan, you will be asked to provide
projected financial statements along with a cohesive, clear
business plan which supplies the name of the firm, location,
production facilities, legal structure, marketing and sales
goals, financial analyses and operating plan. A clear
description of your experience and management capabilities, as
well as the expertise of other key personnel, will also be
needed.
18. What kind of profits can I expect?
Not an easy question, and you need to consider income and
expenses before you even start to think about profits. However,
there are standards of comparison called "industry norms and
ratios" which can help you estimate your profits. Return on
Investment (ROI), for example, estimates the amount of profit
gained on a given number of dollars invested in the business.
These ratios are broken down by Standard Industrial
Classification (SIC) code for assets and size, so you can look up
your type of business to see what the industry averages are.
These figures are published by several groups, and can be found
at your local library. Help is also available through the SBA,
through SBA's Business Information Centers and the trade
associations that serve your industry.
19. What should I know about accounting and bookkeeping?
The importance of keeping adequate records cannot be
stressed too much. Without financial records, you cannot
determine how well your business is doing or where it is going.
At a minimum, records are needed to substantiate:
1. Your tax returns under Federal and State laws,
including income tax and Social Security laws;
2. Your request for credit from vendors or a loan from a
bank; and
3. Your claims about the business, should you wish to sell
it.
But most important, you need them to run your business
successfully and to increase your profits.
20. How do I set up the right record keeping system for my
business?
The type of records and how many you need depend on your
particular operation. The SBA's resources and an accountant can
provide you with many options. When deciding what is and is not
necessary, keep in mind the following questions:
1. How will this record be used?
2. How important is this information likely to be?
3. Is the information available elsewhere in an
equally accessible form?
21. What financial statements will I need?
You should prepare and understand three basic financial
statements:
(1) the balance sheet, which is a record of assets,
liabilities and capital at a specific point in
time;
(2) the income (profit and loss) statement, which is a
summary of your earnings, expenses and net profit
(or loss) over a given period of time; and
(3) the cash flow projection, which shows the actual
inflows and actual outflows of cash into and out
of your business.
22. What does marketing involve?
Marketing is your most important operational concern. There
are four basic aspects of marketing, often called the "four P's":
*Product: A description of the item or service you sell.
*Price: The amount you charge for your product or
service.
*Promotion: The ways you inform your market as to who, what
and where you are.
*Place: The distribution channels you use to offer the
product to the customer.
As you can see, marketing encompasses much more than just
advertising or selling. For example, a major part of marketing
involves researching your customers: What do they want? What
can they afford? What do they think? Your understanding and
application of the answers to such questions play a major role in
the success or failure of your business.
23. What is my market potential?
The principles of determining market share and market
potential are the same for all geographic areas. First,
determine a customer profile (who) and the geographic size of the
market (how many). This is the general market potential.
Knowing the number and strength of your competitors (and then
estimating the share of business you will take from them) will
give you the market potential specific to your enterprise.
24. What about advertising/promotion?
Your business growth will be influenced by how well you plan
and execute an advertising program. Because it is one of the
main creators of your business' image, it must be well planned
and well budgeted. Contact local advertising agencies or a local
SBA office to assist you in devising an effective advertising/
promotional strategy.
25. How do I set price levels?
The price of a service or item is based on three basic
production costs: Direct Materials, Labor and Overhead (the share
of facilities, utilities, taxes, insurance, security and other
general operating costs of the business attributable to the
product or service -- for example, if one product accounts for 10
percent of your business, 10 percent of your overhead is assigned
to it). After these costs are determined -- the "break-even"
cost -- you factor in the profit desired. Because pricing can be
a complicated process and you must remain competitive as well as
profitable, you may wish to seek help from an expert.
26. Are some locations better than others?
Time and effort devoted to selecting where to locate your
business can mean the difference between success and failure. The
kind of business you are in, the potential market, availability
of employees, the number of competitive establishments and
customer accessibility all determine where you should put your
business.
Location is critical to small retailers where traffic flow
spells the difference between success and failure. Home-based
businesses initially operate out of the founder's home and, as
they grow, the issue of location becomes vital to their continued
success.
27. Is it better to lease or buy the store (plant) and
equipment?
This is a good question and needs to be considered
carefully. Leasing does not tie up your cash; a disadvantage is
that the item then has no resale or salvage value since you do
not own it. Careful weighing of alternatives and a cost analysis
will help you make the best decision.
28. Can I operate a business from my home?
Yes. In fact, experts estimate that as many as 20 percent of
new small business enterprises are operated out of the owner's
home. Local SBA offices and state chambers of commerce can
provide pertinent information on how to manage a home-based
business.
29. How do I find out about suppliers/manufacturers/
distributors?
Most suppliers want new accounts. A prime source for finding
suppliers is the Thomas Register, which lists manufacturers by
categories and geographic area. Most libraries have a directory
of manufacturers listed by state. If you know the product line
manufacturers, a letter or phone call to the companies will get
you the local distributor-wholesaler. In some lines, trade shows
are good sources of getting suppliers and looking over competing
products.
30. Where can I go for help?
The U.S. Small Business Administration has offices in nearly
every major city in the country. SBA operates the toll-free
"Answer Desk" at 1-800-8-ASK-SBA, to give callers direct referral
to appropriate sources of information. Sponsored by SBA are a
variety of counselling, training and information services
including the Service Corps of Retired Executives (SCORE),
Business Information Centers (BICs) and Small Business
Development Centers (SBDCs). In addition, procurement center
representatives can be found at each major military installation.
More than 2,700 chambers of commerce are located throughout the
country to provide additional assistance.
The bulletin board, SBA ONLINE and SBA's World Wide Web page
sba.gov on the Internet are excellent areas to get pertinent
information.
31. What do I do when I'm ready?
You have done your homework: you have a complete business
plan; you know where you want to operate; you know how much cash
you will need; and you have specific information on employee,
vendor and market possibilities. You now may want someone to
look over your plans objectively. Contact the business
department at a local college for another opinion. A SCORE
representative at the Small Business Administration can also
review your work and help with the fine tuning. SBA has Business
Information Centers in nearly every state where you can utilize
state of the art technology yourself, and also receive
counseling. Then, when you have made the final decision to go
ahead, it is time to call the bank and get going. Good luck!
All of SBA's programs and services are extended to the
public on a nondiscriminatory basis.
----------
FINANCING FOR THE SMALL BUSINESS
WHY FINANCING IS IMPORTANT TO YOUR BUSINESS
Many people dream of starting and managing their own business.
Some actually do start a business and achieve their dream; others
keep on dreaming. Why is this so? What separates the successful
entrepreneur from the unsuccessful?
In many cases, it seems to be whether the prospective business
owner has access to sufficient funds to turn the dream into
reality. You've probably heard stories about how many businesses
fail each year. Sometimes their failure can be traced to a lack
of financing. It is difficult to guess how many businesses never
even start because of that same lack of funding.
Just learning where and how to get the funds to start or expand
your business can be confusing, frustrating and time consuming.
The amount of financing may be as little as $100 or more than $1
million, based on the type of business. Many different businesses
can be started with a relatively small amount of money.
This guide will explain how, when and where to secure the capital
your business needs to be a success and will give you
step-by-step instructions on how to finance your business in the
most profitable ways possible. Finding money may be difficult at
times, but the economy depends heavily on small businesses like
yours. It is possible to get the money that your business needs,
and the first step to success is knowing how and where to look.
WHO CAN GET FINANCING TO START OR EXPAND A BUSINESS?
You can. Almost every valid business idea can be funded; it's a
matter of knowing where to look. When a new business is a
success, everyone involved wins too. You as the owner certainly
benefit. So does the economy, since your business helps it to
grow. A successful business also creates new jobs and adds an
important product or service to the community. It is for all
these reasons that organizations and individuals may be willing
to invest in your business; as your business profits so do your
investors.
HOW MUCH MONEY WILL YOU NEED?
Every business is different, but it is still possible to get a
reasonable idea of how much cash your business is likely to need
by considering a few key factors.
Does Your Business Produce a Product or Provide a Service?
Initially, a service business will require less cash because it
will not have high material and equipment costs. If you intend to
manufacture a product, you must consider the type and amount of
direct materials and equipment needed and expenses incurred.
Who Will Provide Labor?
Do you intend to do most of the work yourself or will you hire
employees to assist you? Contributing your own time to the
business is one way to keep costs down. Later, when your business
is firmly established, you may wish to hire employees to take
over many of the day-to-day operations.
Do You Have Personal Funds to Invest in Your Business?
Almost all investors prefer or require that you contribute some
of your money to the business. This contribution of unborrowed
funds is called equity. There is no fixed percentage for this
equity contribution, but most lenders require at least 25 percent
of the total amount needed to establish the business. The amount
of equity required is also influenced by other credit factors,
such as management experience and adequacy of collateral.
Can You Provide for Your Personal Expenses While the Business Is
Getting Started?
It is unusual for a beginning business to show a profit in the
first few years. It's good strategy to plan to cover your
personal living expenses for at least six months while your
business is getting started. If your business is already
operating, it may be necessary to reduce your salary while you
try to expand. If you have your own funds set aside for your
personal expenses during these periods, you will have one less
expense for which you will need borrowed funds.
ESTIMATING YOUR EXPENSES
There are certain expenses that virtually all businesses must
incur. The following chart will help you estimate your typical
expenses. (This is not an all inclusive list. It provides some of
the more typical expenses.)
Office space rental $---------------
Office equipment $---------------
Office supplies $---------------
Insurance $---------------
Utilities (phone, electricity,
heat, water) $---------------
Maintenance $---------------
Advertising $---------------
Labor $---------------
Business licenses $---------------
A manufacturing business will also have specific expenses related
to production. Therefore, the following expenses should also be
considered:
Raw materials $---------------
Machinery and equipment rental $---------------
Warehouse or factory space rental $---------------
Total estimated costs $---------------
ASSESSING YOUR FINANCIAL NEEDS
Once you have determined your expenses, you will need to estimate
what percentage of the funds you can supply yourself and what
percentage you must find elsewhere. At this point, the figure may
seem overwhelming. Don't be discouraged. It's far better to have
realistically assessed your situation early than to rush into a
new venture before you've planned adequately. Almost all
businesses need outside funds and yours probably will not be an
exception to the rule. You should prepare a month-by-month cash
flow projection for the entire first year, perhaps with the help
of your accountant or banker. If the projection is realistic, it
will clearly show how much financing you need. Local SBA offices
have cash flow projection forms; ask for Form 1100.
Yes, starting a new business can be risky, but it can also pay
big rewards both in personal satisfaction and in economic return.
TYPES OF FUNDING
DEBT OR EQUITY?
In deciding how to finance your business, you need to consider
certain questions:
- How much control of your new business can you comfortably
give up?
- Which facts will debt and equity financiers be interested
in? How do debt and equity requirements differ?
- How highly leveraged do you want your company to be? (The
higher the amount borrowed compared to the amount of
equity, the higher the leverage.)
In order to answer these questions, it is important that you
clearly understand how debt financing and equity financing work
and that you be aware of the advantages and disadvantages of each.
DEBT FINANCING
Debt is a direct obligation to pay something (cash) to someone
(an investor or lender). In exchange for having lent you the
money, an investor will expect to be paid interest. Obviously,
this means that you will repay more money than you have borrowed.
Therefore, an important feature of debt financing is the interest
rate you will be charged.
Interest Rate and Risk
The interest rate usually reflects the level of risk the investor
is undertaking by lending you money. Investors will charge you
lower interest rates if they feel there is a low risk of the
debt's not being repaid. Investors will raise interest rates if
they are concerned about your ability to repay the debt or if you
have a history of slow payments to lenders as shown on your
personal or business credit reports.
It is important to realize a new business is likely to be charged
a higher interest rate than a well-established business because
the lender will feel a new business represents a greater risk.
Here's an example of how interest rates can affect your loan
repayment amount:
Example 1: A ten-year loan for $50,000 at 12 percent interest
requires monthly payments of $717.
Example 2: A ten-year loan for $50,000 at 15 percent interest
requires monthly payments of $807.
A payment difference of $90 each month, over 120 months, makes
the loan in Example 2 almost $11,000 more expensive over the life
of the loan.
What Do Debt Lenders Look For?
A debt lender will evaluate your loan request by considering
answers to several key questions:
- Can you offer reasonable evidence of repayment ability-
either established earnings (for an existing business)
or income (profit and loss) projections (for a new
business)?
- Do you have sufficient management experience to operate
the business?
- Do you have enough equity in the business? Equity
provides what lenders call a cushion for creditors.
- Do you have a reasonable amount of collateral (assets
to be acquired, residential property equity, etc.)?
Advantages of Debt Financing
The biggest advantage of debt financing is that it allows you,
the business owner, to retain control of your company. You are
therefore entitled to all company profits and have ultimate
decision-making authority. Since many entrepreneurs start a
business for exactly these reasons, a critical advantage of debt
financing is that it provides you with some financial freedom;
your debt is limited to the loan repayment period. After you have
repaid the borrowed money, the lender has no further claim on
your business.
Disadvantages of Debt Financing
The biggest disadvantage of debt financing is having to make
monthly payments on a loan. Cash may be scarce and expenses may
be higher than estimated during the early years of a new
business. Even so, the lender must be paid on time and there are
severe penalties for late or missed payments, such as additional
fees, a poor credit rating and the possibility that the lender
may call the loan due.
Another disadvantage of borrowing funds is the difficulty in
obtaining them. In general, lenders prefer to invest in proven
businesses. If your business is new, a lender may charge you a
high interest rate or may refuse to make the loan entirely. In
contrast, if you have been in business for a significant period
of time, you may find debt lenders very happy to extend loans.
EQUITY FINANCING
Equity financing involves no direct obligation to repay any
funds. It does, however, involve selling a partial interest in
your company. In effect, an equity investor becomes your business
partner and will have a degree of control over how your business
is run. For example, the sale of stock, one type of equity
financing arrangement, typically works as follows:
Step 1 - You determine from your analysis that your business will
need more funds than you can provide.
Step 2 - You consider financing options and decide that you prefer
to sell an interest in your company rather than borrow
money.
Step 3 - You arrange to offer a sale of stock. This can be much
more complicated than it sounds because you must comply
with an array of legal and reporting requirements for
the life of your business. After shares of your stock
are purchased, investors own a portion of your company,
which they can keep or sell to others.
What Do Equity Investors Look For?
Equity investors buy part of your company by supplying some of
the capital your business requires. Because they will own a share
of your business, equity investors are interested in the
business's long-term success and future profitability.
Equity investors can resell their interest in your company to
other investors. If your business is doing well, they will be
able to sell their stake at a higher price than they paid and
make a profit. Legally, equity investors are more exposed to risk
than are debt investors. If your business fails, equity investors
stand to lose more money than debt investors, since creditors are
typically paid before owners in the event of business failure.
Since equity investors are taking the greater risk, they expect
to earn more on their investment than do debt investors.
Advantages of Equity Financing
With equity financing, you do not repay the money invested by
others (unless a payoff agreement is made at the time of
investment). This can be important when cash is at a premium.
Also, your ideas for making your business successful may carry
more weight with a potential equity investor than with a debt
investor. Since it is in an equity investor's best interest for
your business to grow and expand, he or she will be more likely
to consider sound business ideas than will a debt investor, who
is more concerned with the security of the deal proposed.
Many people who are interested in starting or expanding a
business have more ideas than money; this can be an important
factor in favor of equity financing. In addition, equity
investors, with their genuine interest in your success, can be a
good source of advice and contacts for your business.
Disadvantages of Equity Financing
The biggest drawback of equity financing is that you give up some
control over your business. You may or may not find this
acceptable. Remember, when you accept equity partners, you are
selling part of your business. It may be very difficult to retain
control in the future.
Also, you may find your equity investors do not always agree with
your plans for the business. However, since they own part of your
business, you will have to consider their point of view, even if
you do not agree with their choices.
Finally, equity financing tends to be very complicated and
invariably will require the advice of attorneys and accountants.
A great deal of paperwork must be prepared and filed. For
example, public companies must comply with specific legal
regulations that govern their ways of doing business.
POSSIBLE SOURCES OF FINANCING
Most new small businesses start out by borrowing money rather
than by selling stock. If your business does well, you may at
some point combine both types of financing as your needs change.
Because knowing how, when and where to borrow is so important to
the success of your business, you should be aware of the variety
of possible funding sources. These fall into two basic
categories: private sources, such as your local bank, and public
sources, such as the federal government.
PRIVATE SOURCES
Private sources of financing are either personal sources (savings
or loans from friends and relatives) or external sources (debt
lenders, equity lenders and arrangements that combine debt and
equity).
Savings
Personal funds are the most likely, and the most typically used,
source of funds for a new business. Most lenders require that a
reasonable percentage of your own funds be invested in your
business, as an indication that you will work hard to make the
business a success. You will find most investors unwilling to
consider your request for funding if you have not contributed
cash. This can present a problem, though. Most entrepreneurs do
not have the personal resources to provide all of their initial
financing. They are not alone. Almost all business owners must
borrow money from outside sources.
It is helpful if you, as an owner, provide some of the funds from
your own savings. You may also want to consider such personal
sources as the cash value of a life insurance policy, a home
equity loan or even a credit card. Combining personal savings
with external sources of debt and equity will permit you to
benefit from the effects of leverage, i.e., using other people's
money to earn a profit for yourself.
One of the biggest advantages of using personal savings to fund
your business is your easy access to those funds. There are no
loan applications to complete, no lenders to visit, no paperwork
to prepare and no interest payments to make. If available,
personal savings are a valuable source of capital for your
business.
Finally, a big advantage of having your own start-up capital is
that it ensures that you retain ultimate control of and
responsibility for your business.
Friends and Relatives
Friends and relatives are often an important source of capital
for your business. Since they know you well, the terms of
repayment are likely to be more flexible than those of strangers.
Keep it formal. It's a good idea to prepare a formal agreement
when a friend or relative is willing to invest money in your
business. This will make the relationship professional and will
help to avoid future misunderstandings about how much was
borrowed or when it should be repaid.
The investment can take the form of a direct loan or an equity
investment. Review the previous section on debt versus equity
financing to determine which arrangement will be best in your
particular circumstances.
Based on their personal relationship and their impression of your
business judgment, friends and relatives may be willing to invest
in your business even when others may not. Beware, however.
Because they know you well, they may wish to be more involved in
the day-to-day operations of the business than you would like.
Friends or relatives may feel their investment entitles them to a
routine say in how the business is run, even though you intend to
repay the loan.
Debt Financing
When it is necessary to look to someone other than yourself or a
close friend or relative for business funds, it helps to be aware
of other sources.
Banks
Banks are financial institutions that accept deposits and make
loans. They fall into several categories, such as savings and
loans, thrift institutions and commercial banks. Knowing the
category in which they include themselves can tell you a lot
about the kinds of loans these banks are interested in making.
Savings banks are more experienced in dealing with consumer
loans, such as home mortgages and automobile loans. Commercial
banks have more experience and interest in business loans. This
doesn't mean that you can't go to a savings bank for a business
loan. It may be a good choice. Just be sure to consider that
bank's primary focus and level of experience with your type of
request. Probably the most important point to keep in mind when
dealing with a bank is that bankers don't like risk. Their
primary concern is always the safety of their funds.
How do they operate? Banks may be one of the first sources that
come to mind when you begin searching for additional business
capital. Certainly, they will meet your most basic condition:
they have money available to lend. However, it may be difficult
for a new business to borrow from a bank since lenders usually
prefer to lend to established businesses. Keep in mind, the first
responsibility of a bank is to protect its depositors. As a
result, bankers tend to be very cautious about lending money.
Banks come in all shapes and sizes and there are some real
differences among them. Small community banks with two or three
branches may operate quite differently from large commercial
banks with hundreds of loan offices. You will want to carefully
review the differences among banks before you select a particular
one. Each type offers certain advantages. A commercial bank may
be more experienced and familiar with a business loan request,
but a community bank may know you personally and have more
confidence in your ability to repay your debt.
Where can you get more information? Chances are you're already
familiar with several banks in your area. It's extremely helpful
to approach a bank with which you already have a savings or
checking account or a personal loan. For banks outside your area,
you may want to consult a banking directory, such as Rand
McNally's Bankers Directory or Polk's World Bank Directory. Most
libraries have copies. Directories list the name, location,
assets, liabilities and officers of banks.
Debt Financing
Credit Unions
Credit unions are financial institutions developed by the members
or employees of a company, labor union or other group. Their
overall goal is service to their members, as opposed to profit
making. As a result, their interest rates and other terms may be
more favorable than those offered by a bank. Credit unions are
regulated by the National Credit Union Administration.
What are the advantages of a credit union? The company for which
you or another family member works may have a credit union. If
you decide to start your business while you are still working for
a large company, you may be able to borrow some of the capital
you will need from the credit union. As your business becomes
more profitable and better able to support you financially, you
may decide to concentrate all your energies and time on your
business.
Credit union interest rates are often lower than the rates
charged by other lenders. The amount you will be able to borrow
from a credit union may not be large, but this source of funds
may be helpful in making initial purchases for your business.
Also, a loan application through a credit union may be more
likely to be approved as you may be known to the individual
evaluating your loan request.
Where can you get more information? If you're employed, ask the
human resources department of the company where you work about
your eligibility to join a credit union. There are directories
available at your local library listing all of the credit unions
in the United States.
Debt Financing
Consumer Finance Companies
Consumer finance companies make small personal loans secured by
collateral. Unlike banks, they do not accept deposits and they
lend under the jurisdiction of each state's small loan
regulations. Consumer finance companies will often consider loans
with 100 percent financing because the loans are secured by an
asset.
How do they operate? Consumer finance companies charge higher
interest rates and processing fees than banks and credit unions
but can be more flexible about approving requests. Loans from
this source are more expensive because they are considered to be
more risky. In some cases, the interest rate you will be charged
will be the highest allowed by law for your state.
Consumer finance companies are often approached by people who
have poor credit ratings. Certainly, if you want to start a
business and your credit rating is questionable, you will find
consumer finance companies a more likely source of funds.
However, this does not mean that you should only borrow from a
consumer finance company if you have credit problems.
You should be aware that loans from this source will usually not
exceed several thousand dollars. Also, keep in mind that if you
can't repay your debt, the item that you purchased with the funds
will be seized.
Where can you get more information? The classified advertising
section of your telephone directory lists consumer finance
companies under the heading of Loans. Call and request a meeting,
or ask them to send you written information.
Debt Financing
Commercial Finance Companies
The primary purpose of a commercial finance company is to provide
loans to purchase inventory and equipment. This can be a useful
resource, particularly if your business will manufacture a
product or act as a wholesaler. Commercial finance companies are
similar to consumer finance companies but concentrate on business
loans rather than consumer purchases.
How do they operate? Like consumer finance companies, commercial
finance companies charge higher rates of interest than banks.
They also may be more willing than banks to approve your loan
request. Commercial finance companies will require your debt be
collateralized. This means if you purchase a computer with the
funds you have borrowed, they will have a direct claim on your
computer. If you can't make your monthly payments, the commercial
finance company will be entitled to take your computer and sell
it to recover its investment.
Where can you get more information? Check the telephone directory
for a list of commercial finance companies in your area. You
should research your rights when borrowing from a loan company by
reading your state's laws concerning debt repayment.
Debt Financing
Trade Credit
When a vendor allows you to buy a product and to delay paying for
it, this is known as trade or vendor credit. Vendors offer this
service to help make their products more attractive and to induce
you to buy from them rather than elsewhere. Offering easy credit
terms encourages sales. Keep in mind that the vendor is in
business to make money. There may be a hidden cost for flexible
credit terms in the form of slightly higher prices.
How does it work? Trade credit is one of the most readily
available sources of financing for your business. In many
situations, you will be able to purchase supplies and equipment
directly from a vendor and spread your payments over several
months or years. Often it is possible to make no or a minimal
down payment and to avoid interest charges as well. Even
suppliers who will not extend credit in the beginning of your
relationship may be very willing to do so after you have placed
several orders.
When you are trying to pay for equipment and/or supplies that
your business needs, trade credit can be invaluable. Office
furniture, computers, certain raw materials and manufacturing
equipment are examples of products that can be purchased with
trade credit.
Where can you get more information? Discuss payment terms with
vendors with whom you deal or plan to deal. There may be dramatic
differences in terms among different suppliers. Talk to several
suppliers before making a decision. Remember to ask what types of
credit they offer and if they grant a discount for prompt
payment. Also, be sure to compare prices. Vendor financing is not
desirable if you are being charged substantially more for the
same product you can purchase elsewhere more cheaply with cash.
Debt Financing
Insurance Companies
Insurance companies are a possible source of financing for your
business because they make commercial loans as a means of
investing unused portions of their income. Generally, insurance
companies make term loans and mortgage loans.
How do they operate? If you borrow from an insurance company, you
can expect terms and interest rates similar to those available
from a commercial bank. Insurance companies can provide your
business with a large amount of capital at market interest rates,
but you must have assets sufficient to cover the debt, plus 20-30
percent extra. In effect, you mortgage your property to free cash
for your business. This allows you to retain title to the
property while freeing cash invested in it. Insurance companies
usually have high loan limits; this makes them a good source of
funds if you need a large supply of capital.
Where can you get more information? Speak with your insurance
agent or ask friends to make recommendations. You may also wish
to request information packets from insurance companies' loan
offices.
Debt Financing
Factor Companies
A factor company can be a useful source of funds if you are
already in business and have made sales to customers. Factor
companies purchase your accounts receivable at a discount,
thereby freeing cash for you sooner than if you had to collect
the money yourself. You transfer title of your accounts
receivable to the factor company in exchange for a cash payment.
How do they operate? Factor companies provide two types of
financing alternatives: recourse factoring and nonrecourse
factoring.
In recourse factoring, you retain part of the risk for ultimately
collecting the debts owed to you. The factor company assists you
by speeding up the process. For example, the factor company
purchases your receivables and advances you cash while the
accounts are being collected. However, if your customers do not
pay, you will be held responsible for repayment to the factor
company.
In nonrecourse factoring, you sell all rights and obligations
concerning your accounts receivable. The factor company purchases
your receivables and collects the debts owed. If a customer does
not pay, you will be under no obligation to the factor company.
Factor companies can be a useful source of funds for a new or
existing business. They are not appropriate as a means of seed
capital to start a business because they require that you have
accounts receivable to sell.
Where can you get more information? Factor companies often
advertise in the business sections of newspapers. Usually the
advertisement will say We buy accounts receivable or something
similar. Make sure you work with a reputable company that will
not alienate your customers by harassing them for payment.
Debt Financing
Leasing Companies
A leasing company is a business that rents various types of
equipment to businesses and individuals. By renting rather than
buying the equipment your business will need, you will be able to
avoid many capital expenditures associated with the purchase of
equipment.
How do they operate? Many leasing companies require a down
payment or several months' prepaid rent. Some, however, may allow
you to lease equipment without requiring any prepayment. This
depends upon the relative size or worth of the asset leased. The
small amount of cash needed to secure the use of equipment for
your business makes leasing very attractive to many business
owners. However, since you do not actually own the equipment, the
leasing company may repossess it if you miss a payment.
An advantage provided by leasing is that you will need little or
no cash to secure equipment and you will be able to upgrade your
equipment more easily than if you purchased it. If your industry
experiences rapid changes in technology, leasing may help you to
avoid the expense of purchasing quickly outdated equipment.
Obviously, you will not be able to meet all of the financing
needs of your business by leasing. You will still need additional
funds for ongoing expenses, such as employee salaries. Leasing,
however, can allow you to hold on to the cash you may otherwise
have spent on equipment, and this cash savings can be used in
other, less easily financed, areas.
Where can you get more information? Many equipment suppliers
offer leasing arrangements in addition to actual sales. Discuss
with suppliers and vendors what types of items they lease and
what terms they offer. A service contract can usually be
purchased for an additional charge.
Equity Financing
Venture Capital Firms
Basically, venture capital is an investment in an unproven
business. Venture capital firms provide equity funds to new and
young companies. This immediately separates venture capital firms
from investment firms, which prefer to invest in existing,
financially secure businesses. Venture capital firms do not make
outright loans. Instead, they buy an equity interest in the
business that gives them the same advantages and disadvantages
associated with equity arrangements.
How do they operate? Venture capitalists are looking for two
basic things when considering whether to invest in your business:
- High return - Because venture capitalists are willing to
take unusual risks by investing in a new business, they
require unusual returns as well, perhaps seven to ten
times their original investment within five to seven years.
- Easy exit - Venture capital firms will realize a profit by
selling their interest in your business at some future
point.
In general, venture capital firms are most interested in
investing in new technology and can typically supply large sums
of money. Venture capitalists are not passive investors. They
play an active role in the strategic planning phase of your
business and seek continuing involvement. They will also expect
to be fully informed about operations, problems and whether your
joint goals are being met.
Where can you get more information? Keep in mind that venture
capitalists have extremely rigid investment standards and
relatively few businesses qualify. Still, this capital source is
worth pursuing because venture capitalists specialize in start-up
financing and have access to large sums of money. There are many
books on venture capital in your local library.
Equity Financing
Closed-end Investment Companies
A closed-end investment company is similar to a venture capital
firm but has smaller sums of money available to invest.
Closed-end investment companies are most likely to invest in a
proven business, but some specialize in new businesses.
How do they operate? Like venture capital firms, closed-end
investment companies are interested in purchasing the stock of
your business. Keep in mind what this means: you will be selling
a portion of your business and giving up some control as well.
Closed-end investment companies are called closed because they
have a fixed amount of money available to invest. The investment
company has sold shares of stock to private investors, and these
funds are available to invest in your business. As with other
types of stock purchases, if you make a profit, the stockholders
make money on their investment.
Because closed-end investment companies have limited amounts of
funds available to lend, they may or may not be looking for new
investments. It depends upon whether they have cash available at
a particular time.
Where can you get more information? Legitimate closed-end
investment companies are registered with the federal government.
Your banker, accountant or attorney may be able to recommend
reputable companies.
Equity Financing
Corporate Capital Sources
In order to generate additional profits, corporations sometimes
establish corporate venture capital firms, which operate within
the overall corporation. These firms differ substantially from
traditional venture capital firms. One of the biggest differences
is that they are not motivated purely by profit, at least not in
the immediate sense. A corporate capitalist firm typically seeks
access to new markets in addition to realizing a financial gain.
How do they operate? Corporate capital firms operate in much the
same way as traditional venture capital firms. The corporation
makes an investment in your business in exchange for an ownership
interest. In this way, the needs of both the corporate investor
and the entrepreneur are met. The corporation benefits by
accessing new markets; the business owner benefits by receiving
additional capital.
In addition, associating your business with a corporate capital
source can add credibility when you seek funds elsewhere. The
expertise of the corporation can also be useful in marketing,
manufacturing, product development, etc. Its experience
represents a valuable asset for your business. Corporate
investment in your business will probably take one of several
forms:
- Complete purchase - An outside corporation buys your
business in its entirety, and you forfeit all rights
and control.
- Partial purchase - An outside corporation purchases
part of your business's stock.
- Joint venture - You and an outside corporation create
a partnership, typically one in which you run the
business and the corporation provides capital and
business advice.
- Licensing agreement - As the business owner you retain
control of your business but receive cash for work
performed on contract. Sometimes entering into a
licensing agreement means giving up the rights to
products developed under this agreement.
Where can you get more information? A useful source of further
information on corporate capital suppliers is Corporate Venturing
News, published by Venture Economics, Inc., 16 Laurel Avenue,
Wellesley Hills, MA 02181. You can also contact large
corporations in your area to inquire if they invest in new
businesses.
Equity Financing
Investment Clubs
In many communities, groups of business people form organizations
to invest in new and existing businesses, usually on the local
level. These clubs are typically less formal than a professional
organization might be.
How do they operate? Private investors pool resources to make a
business investment. Because the group invests together, small
investors are able to make funds available to your business on a
scale that would be difficult or impossible if they were
operating independently.
Investment conditions and standards vary from club to club. As
with other equity arrangements, you will give up a percentage of
your business in exchange for funds received from the investment
club.
Where can you get more information? For additional information
contact the National Association of Investors Corporation, 1515
East 11 Mile Road, Royal Oak, MI 48067, (313) 543-0612.
Investment clubs are often informally structured; contact a local
attorney or broker to find a club in your area.
Equity Financing
Employee Stock Ownership Plans (ESOPs)
If your business has employees, it may be possible for you to
sell stock in your business directly to them. Like other equity
arrangements, you will give up a degree of control. But with an
ESOP, you will share control with your employees rather than with
outside investors. This can be beneficial because your employees
will have a vested interest in making your business successfuland
employees can have a large impact on operations.
How do they operate? An ESOP operates in a similar fashion to
other equity sales. Employees purchase shares of stock and
thereby gain an ownership interest in your business. You gain
capital to be used for expansion. Employees may also offer to
take a reduction in salary or benefits in exchange for partial
ownership in the company. This is a good point to consider if you
anticipate problems in meeting a payroll but cannot reduce staff.
One obvious drawback to an ESOP is that a plan of this type is
workable only after you have hired employees. It is not an option
when your business is in the very early stages.
Where can you get more information? Both your attorney and
accountant can provide information on how to structure an ESOP.
They will be very useful in helping you consider all relevant
aspects and potential advantages and disadvantages of the
decision. More information is available from the ESOP
Association, 1100 17th Street, NW, Suite 1207, Washington, DC
20036.
Equity Financing
Private Investment Partnerships
A private investment partnership is an arrangement in which one
or more individuals agree to provide funding for another
individual's business. The role of the partner(s) providing the
funding is limited to supplying capital. Partners are not
responsible for any debts your business incurs and will typically
not play a role in managing the day-to-day operations of your
business.
How do they operate? Private limited partnerships with 35 or
fewer members are not required to register with the Securities
and Exchange Commission. The typical investment is $20,000 or
more per partner. The general partner (you) is responsible for
overseeing operations and for making decisions that will have an
impact on the business and its performance. The limited or
passive partners provide you with funds and expect a substantial
return on the investment. However, the return they will require
may be less than that required by a venture capital firm.
Where can you get more information? Several computer data bases
exist to match entrepreneurs with investors. In this case, your
banker, attorney and accountant may be useful sources of
referrals.
It is also possible to find investors by joining local business
organizations and clubs, where you may meet individuals with
money available to invest.
Combining Debt and Equity Financing
Customers as a Source of Funds
In some industries, potential purchasers of your service may be
interested in offering financial help as you start or expand your
business. They are interested because an additional supplier
(you) provides them with another source for a product or service
they need. The addition of your business to the market may also
increase price competition, resulting in lower prices for the
customer. Each of these aspects translates into important
benefits for the customer, just as the customer's funds translate
into important benefits for you.
How does it work? Both direct loans and equity interests are
possible. Again, a direct loan must be repaid, while an equity
sale diminishes your control. It is a good idea to consider the
advantages and disadvantages of each and prepare a tentative
proposal.
You may need to approach potential customers yourself, or the
customer may come directly to you with an offer. Be wary if the
customer proposes that you sell your product or service
exclusively to him or her in exchange for financial help.
Securing exclusive rights to your products will give the customer
more control over your business operations and pricing than you
may wish. This type of arrangement will shrink your potential
market tremendously. If the customer stops buying from you for
any reason, your business may be in serious jeopardy because you
have not cultivated other customer relationships.
Where can you get more information? Ask the customer directly.
You may find a customer more willing to supply you with financing
than you would expect. The customer receives a return on his or
her investment and gains a supplier. These are very strong
incentives for most businesspeople.
Government Sources
In addition to the private sources we've discussed, there are a
number of government financing sources that may be available to
you and your business. A government agency may be interested in
financing new businesses that will have a direct impact on the
agency or the client population it serves.
If your business produces a product or service you feel would be
of interest to a government agency, contact the agency directly
and request information and applications for grants and other
possible business development resources the agency may control.
It may be helpful to investigate some or all of the following
general sources of assistance available through the government.
U.S. Small Business Administration (SBA)
The SBA may provide a loan guaranty that will help you borrow
from a bank. Essentially, the SBA guarantees the lender that up
to 90 percent of your debt will be repaid. This helps the lender
feel more comfortable about making you a loan. Although the SBA
primarily guarantees loans made by banks and other lenders, there
is a limited SBA direct loan program, generally for Vietnam-era
and disabled veterans, businesses located in areas of high
unemployment and handicapped individuals. Funding for this
program is subject to congressional appropriations.
Loans backed by the SBA usually offer reasonable interest rates
and long repayment terms, making them very desirable. It is the
SBA's goal to assist those businesses unable to borrow
successfully from conventional lenders without the assistance of
the government. You can get additional information on SBA
programs by contacting the SBA field office in your area.
Small Business Investment Companies (SBIC)/Specialized Small
Business Investment Companies (S-SBIC)
The federal government may also be able to help you with
financing through an SBIC or S-SBIC that makes direct loans to
entrepreneurs for start-up and expansion as well as equity
investments. SBICs and S-SBICs are licensed by the SBA and
operate under its guidelines. They are privately owned
organizations, chartered by the state in which they operate.
There are several conditions your business must meet in order to
be considered for assistance from these sources. Typically, an
SBIC or S-SBIC is less averse to risk than a bank. They can
provide your business with both loans and equity investments, as
well as technical assistance. You can obtain the Directory of
Operating Small Business Investment Companies by visiting the SBA
regional or district office nearest you or by writing to: Deputy
Associate Administrator for Investment, U.S. Small Business
Administration, 1441 L Street, N.W., Washington, DC 20416.
More information is available by contacting the National
Association of Small Business Investment Companies and the
American Association of S-SBICs, both located in Washington, D.C.
Economic Development Commission (EDC)
The Economic Development Commission, a part of the U.S.
Department of Commerce, lends to new and existing businesses in
an effort to create new jobs in economically deprived regions.
There are a number of specific conditions that must be met in
borrowing through the EDC, including location. You can contact
the EDC through the U.S. Department of Commerce in Washington,
D.C., or the local office of the Department of Commerce.
A Last Note about Government Sources
As with all types of financing, government sources have diverse
requirements. Learn which agencies and/or programs might be a
possible financing source for your business and then contact them
for the appropriate paperwork to set the process in motion.
ALTERNATIVE WAYS TO OWN A BUSINESS
In addition to the possibilities already mentioned, you may want
to consider two slightly different ways of owning and operating
your own business: purchasing either a franchise or an existing
business.
Franchises
Buying a franchise gives you the right to sell a particular
product or service. You retain a portion of your profits and a
portion is paid to the overall organization that sold you the
franchise.
How do they operate? One of the easiest methods of becoming a
sole proprietor and acquiring the needed capital at the same time
is to purchase a franchise. It is possible to start some
franchises with relatively little money and to obtain start-up
financing directly from the company selling the franchise. If a
direct loan is not possible, the seller of the franchise may be
willing to cosign a loan with another lender.
The seller of the franchise supplies you with materials, a
recognized brand name and sales and marketing assistance. Some
franchises are fairly inexpensive while others may cost hundreds
of thousands of dollars.
Strict limits on innovation. The relative ease with which you can
become the owner of a franchise is not without its price. By
purchasing a franchise, you give up a high degree of control over
your business. Most often the product and operations of a
franchise are strictly regulated and there is little room for new
ideas.
Purchasing a franchise is a sort of middle ground between working
for someone else and being an independent business owner. You
should, of course, evaluate franchise opportunities as carefully
as you would any other type of business. Profit potential, as
well as the cash needed to get started, should be considered in
your choice.
Where can you get more information? Directories of every
franchise in the United States can be found in your local
library. Information on franchises is also heavily promoted at
trade shows and in business magazines. Virtually every type of
business imaginable can be purchased through a franchise.
Alternative Ways to Own a Business
Purchasing an Existing Business
One path to becoming an entrepreneur is to buy an already
operating business from its present owner. Especially with regard
to financing, buying an existing business may have certain
benefits over starting a business from scratch. In many cases,
the current owner will finance the sale of the business.
For example, you read a newspaper advertisement of a small
restaurant for sale in a good location. The owner is willing to
sell his or her interest in the business for $15,000 if the buyer
takes over existing business obligations, e.g., space rental,
employee wages, etc. After visiting the restaurant and carefully
analyzing the business potential, you decide you are interested
in owning this business and decide to purchase it.
How can you pay for the business? Let's assume that you don't
have $15,000. You have calculated that by using the money you
have saved, you can offer the owner $3,000. But this still leaves
you $12,000 short. What are your alternatives?
1. Ask the owner to finance the $12,000.
2. Try to find a way to borrow the money using the methods
and sources outlined above.
3. Offer the owner less than the asking price, thereby
reducing or eliminating the amount of cash needed.
No matter which alternative you choose, remember that the owner
of an existing business often will help you to find financing. An
owner who wants or needs to sell a business will be anxious to
help you find a way to make the purchase possible.
Why is it being sold? Learn why the owner is selling the
business. Make certain that the reasons do not spell disaster for
the next owner. You may have nothing to worry about if the
present owner is selling in order to retire; however, if he or
she is selling because the business is not profitable due to few
customers and/or poor location, you will need to realistically
assess your ability to improve the situation. If you do not have
a carefully researched plan, you may soon find yourself repeating
the mistakes of the previous owner.
Where can I get more information? The classified section of your
newspaper is a good source of information on businesses for sale.
You may also want to contact a business broker who, like a real
estate broker, sells businesses and properties for a commission.
The commission is paid by the seller of the business, which means
that the broker is being paid to represent the seller rather than
you, the buyer.
HOW DO YOU ACTUALLY RECEIVE FUNDS FROM FINANCING SOURCES?
All of the sources of financing discussed have one critical point
in common: they all require that you sell your ideas and plans to
someone who controls the money you need. In this sense, you
shouldn't underestimate the importance of being a good
salesperson. The responsibility is on your shoulders to share a
sense of excitement about your business with the person or
organization evaluating your request. This remains true
regardless of whether you decide on debt financing, equity
financing or a combination of the two.
Negotiating Financing
If you plan to borrow money, there are certain elements of the
borrowing process that are critical to your success.
You and the investor have different goals. If you are starting or
have already started a business, chances are you strongly believe
you will be successful. The investor, however, will not have this
same degree of confidence in you and needs to be convinced of
your sincerity and of the validity of your ideas. The lender's
goal is protection of his or her investment, while yours is more
likely financial growth.
The investor will need documentation of virtually every statement
that you make. If you say your business will grow by 10 percent
per year for five years, be prepared to support your claim with
facts and figures.
You and the investor need each other. Clearly, you need the
investor, because he or she controls whether you will have access
to funds integral to the success of your business. Without
financing, your ideas may remain just that. But there's another
side to the coin: the investor needs your business. He or she
makes money from interest, fee income and/or profit generated
from your business. Keep this point in mind: the investor cannot
thrive without you anymore than you can thrive without the
investment.
Getting financing takes time. Be prepared to wait weeks or months
before any money actually changes hands. Don't approach a lender
when you are desperate for cash. You'll greatly harm your chances
of having your request approved. Instead, plan for your financial
needs well in advance.
Getting financing takes persistence. You may be turned down many
times before someone agrees to provide funds. Don't be
discouraged; there are many sources who may be willing to help
finance your business. Remain determined and don't give up after
just a few tries. If your business ideas are good ones, you will
eventually be successful in obtaining financing.
Ten Rules of Negotiating for Financing
1. Prepare a comprehensive business plan.
2. Be prepared to explain uses and benefits of the
proposed loan.
3. Speak to the appropriate person.
4. Do not overstate your financial strength.
Be realistic.
5. Give complete information about your business.
6. Seek a lender with whom you feel comfortable.
7. Negotiate interest rates and fees.
8. Give an impression of confidence and competence.
9. Carefully check all terms of the agreement.
10. Dress conservatively.
1. Prepare a comprehensive business plan, including an income
(profit and loss) projection for one year and a cash flow
projection. An overview of competition, composition of man-
agement and staffing, marketing plans and pricing strategy
are also important. Lenders respond favorably to applicants
who know where they are going and who have done their home-
work. See the Appendix: How To Write A Business Plan for
an outline of material that should be included in the busi-
ness plan. Use SBA Form 1100 for Cash Flow Projection.
If your strategy can be adjusted to alternative amounts of
financing, request the preferred amount first and be prepared
to submit the alternative plan if you meet obstacles.
2. Be prepared to explain uses and benefits of the porposed
loan.
Summarize the information in the Sources and Funds Statement
in your business plan, and provide specific examples and
supporting data for uses of the funds (e.g., estimates, list
prices for equipment, etc.).
3. Speak to the appropriate person. With banks, as well as with
all other sources, find out who will make the ultimate
decision about your financing request, and then deal with
this person directly. It is a waste of time to present your
loan request to an individual who does not have the personal
authority to lend you funds.
In banking, most commercial lenders have what is commonly
referred to as a lending limit. This is the amount of money
they are able to lend on their own authority, without having
the request approved by any other parties. It is perfectly
acceptable to ask the amount of the lending limit even before
setting up an appointment and, what's more, it's advisable.
4. Do not overstate your financial strength. Be realistic! Guard
your credibility like the very real asset it is. Remember,
the investor will almost certainly verify everything you say.
If you tell him your first quarter sales were $4,500, be sure
that this is true. Once your integrity and honesty are called
into question, it will be difficult, if not impossible, to
regain your lost reputation.
Even if your misstatements are the result of a legitimate
error rather than a deliberate attempt to make your business
appear more profitable, the investor may feel that this is a
good reason to question your overall business judgment. It's
a very good policy to never say anything you can't support
with data.
5. Give complete information about your business. It is wise to
present all the information the investor requests. Most
investors are required to have certain documents on hand to
invest. Some are requested just as a formality and some are
thoroughly analyzed. Unfortunately, there is no way for you
to tell the difference between the two. Prepare all documents
carefully and double check all facts and figures before
turning over the information. It will be far better for a
negative aspect of your business to be handled openly than
for it to come up later under less favorable circumstances.
This does not mean that you are under obligation to reveal
all your fears and concerns about the business and its
operations. It does mean, however, that you have an
obligation to disclose material or relevant facts about
your business.
6. Seek a lender with whom you feel comfortable. There can be
wide variations among investors. Because you are turned down
by one source does not mean that you will be turned down by
the next. Avoid putting all of your eggs in one basket.
Carefully scrutinize potential investors in the same way that
you investigate any other major business decision. Investors
and lenders are just like everyone else! You will feel
good about working with some and not with others. Be sure to
settle on one who can give adequate attention to your account
and who explains all aspects of the financing relationship
clearly and thoroughly.
7. Negotiate interest rates and fees. We've already noted how a
small difference in interest rates can have a big impact on
your payments. Fees, too, can drastically alter the total
amount you are paying for financing. Typically, you will be
asked to pay points, which are a percentage of the total
loan, due at the time the loan is originated. If, for
example, you borrow $20,000 and are told that there is a 2
percent origination or commitment fee, you can expect to pay
$400 in fees to borrow from this source. The length of the
loan is also important. The shorter the term, the less total
interest you will pay.
All lenders charge different rates and fees. Be aware of what
you are paying. If the lender seems receptive, attempt to
reduce the charges you will incur. In the worst case, the
lender will tell you that the lending conditions cannot be
changed. You've lost nothing by trying to minimize your
costs.
8. Give an impression of confidence and competence. No one likes
to borrow money. It is perfectly reasonable for you to feel
a little nervous when applying for financing, but be careful
not to let your nervousness cloud your judgment. The investor
needs to have a high degree of confidence in your ability to
repay the debt or generate a profit. Be sure of your facts
and rehearse what you will say. Give some thought to the
types of questions you may be asked and consider the best
responses.
Again, remember that the investor is dependent upon you, just
as your business is dependent upon the investor. You are both
in a position to help one another.
9. Carefully check all terms of the agreement. Be sure you know
what you are signing. It is perfectly appropriate to ask that
your attorney or accountant review the conditions of the
agreement. If you or your advisors do not feel comfortable
with some aspect of the agreement, don't hesitate to raise it
as an issue. The time to discuss alternatives is before the
deal is finalized. Once you have signed an agreement, you are
legally bound by it.
The investor will prepare the agreement for self-protection.
Given this, it is not unreasonable to expect the terms to
favor the investor. To a certain extent, this is inevitable,
but try to prevent the insertion of any clauses or conditions
that may present a serious hardship for you.
10. Dress conservatively. Like almost everyone, investors and
lenders feel most comfortable around people like themselves.
For this reason, it is a good idea to dress carefully when
meeting with an investor, even if you do not normally do so
when running your business. A suit and tie are recommended
for men, a jacket and skirt for women. Avoid overly elaborate
accessories. Remember, you are trying to give an impression
of conservative good judgment. Dress to fit the environment.
SOME FINAL POINTS
No one ever said that starting a business would be easy. Without
a doubt, finding the money to start or expand your business
requires hard work and determination. It may be the largest
obstacle you will face when planning to own or expand a business.
Don't despair; financing is available. It's all a matter of
knowing where to look, and now you know!
Perseverance makes all the difference. Most successful
entrepreneurs have been turned down many times for financing.
Remember, it is your job to sell your ideas and to pursue every
possible means of securing capital. If you truly wish to finance
your business, and if your ideas are good ones, you will be
successful.
Don't hesitate to consider a variety of financing alternatives.
Most of the sources described will not alone meet all of your
needs, nor are they intended to. It is far more likely that you
will find a number of sources interesting and you may be able to
borrow successfully from all of them. Most businesses use a
combination of financial sources to adequately fulfill their
changing needs for capital. Be aware of the advantages and
disadvantages of each approach and determine which ones seem most
relevant to your situation. Above all, remain determined. If you
persistently seek financing you will eventually obtain it.
Good luck!
APPENDIX A: HOW TO WRITE A BUSINESS PLAN
The following pages provide a suggested outline of the material
that should be included in your business plan. Your final plan
may vary according to your needs or because of the individual
requirements of your lender.
What Are the Benefits?
Every business can benefit from the preparation of a carefully
written plan. There are two main purposes for writing that plan:
1. To serve as a guide during the lifetime of the business. It is
the blueprint of your business and will provide you with the
tools for analysis and change.
2. A business plan is a requirement if you are planning to seek
a loan. It will provide potential lenders with detailed
information on all aspects of your company's past and current
operations and provide future projections.
Business Plan Outline
I. Cover sheet
Serves as the title page of your business plan. It
should contain the following:
- Name of the company
- Company address
- Company phone number (include area code)
- Logo (if you have one)
- Names, titles, addresses, phone numbers
(include area code) of owners
- Month and year your plan was issued
- Name of preparer
II. Statement of purpose
(Same as executive summary.) This is the
thesis statement and includes business plan
objectives. Use the key words (who, what,
where, when, why, how, and how much) to
briefly tell about the following:
- What your company is (also who, what,
where and when).
- What your objectives are.
- If you need a loan why you need it.
- How much you need.
- Why you will be successful.
- How and when you plan to repay your loan.
III. Table of contents
A page listing the major topics and references.
IV. The business
Covers the details of your business. Include
information about your industry in general, and
your business in particular. Address the following:
- Legal structure - Tell what legal structure you
have chosen and state reasons for your choice.
- Description of the business - Detail your business.
Tell about your history present status and future
projections. Outline your product or service in
terms of marketability. Project a sense of what
you expect to accomplish in the next few years.
- Products or services - Give a detailed description
of your products from raw materials to finished
items. Tell about your manufacturing process. If
you provide a service tell what it is how it is
provided and why it is unique. List future products
or services you plan to provide.
- Location - Describe site and why it was chosen.
(If location is important to your marketing plan
focus on this in the marketing section below.)
- Management - Describe who is behind the business.
For each owner tell about responsibilities and
abilities. Support with resumes.
- Personnel - Who will be doing the work why are they
qualified what is their wage what are their responsi-
bilities?
- Methods of record keeping - What accounting system
will you use? Who will do your record keeping? Do
you have a plan to help you use your records in
analyzing your business?
- Insurance - What kinds of insurance will you need?
What will these cost and who will you use for a carrier?
- Security - Address security in terms of inventory
control and theft of information.
V. Marketing
Covers the details of your marketing plan. Include
information about the total market with emphasis on
your target market. Identify your customers and tell
about the means to make your product or service avail-
able to them.
- Target market - Identify characteristics of your
customers. Tell how you arrived at your results. Back
up information with demographics questionnaires and
surveys. Project size of your market.
- Competition - Evaluate indirect and direct competition.
Show how you can compete. Evaluate competition in terms
of location market and business history.
- Methods of distribution - Tell about the manner in
which products and services will be made available to
the customer. Back up decisions with statistical
reports rate sheets etc.
- Advertising - How will your advertising be tailored to
your target market? Include rate sheets promotional
material and time lines for your advertising campaign.
- Pricing - Pricing will be determined as a result of
market research and costing your product or service.
Tell how you arrived at your pricing structure and
back it up with materials from your research.
- Product design - Answer key questions regarding product
design and packaging. Include graphics and proprietary
rights information.
- Timing of market entry - Tell when you plan to enter
the market and how you arrived at your decision.
- Location - If your choice of location is related to
target market cover it in this section of your business
plan. (See location in the business section of this
outline.)
- Industry trends - Give current trends project how the
market may change and what you plan to do to keep up.
VI. Financial documents
These are the records used to show past, current and
projected finances. The following are the major documents
you will want to include in your business plan. The work
is easier if these are done in the order presented.
- Summary of financial needs - This is an outline indicating
why you are applying for a loan and how much you need.
- Sources and uses of funds statement - It will be necessary
for you to tell how you intend to disperse the loan funds.
Back up your statement with supporting data.
- Cash flow statement (budget) - This document projects what
your business plan means in terms of dollars. It shows cash
inflow and outflow over a period of time and is used for
internal planning. Cash flow statements show both how much
and when cash must flow in and out of your business.
- Three-year income projection - A pro forma income statement
showing your projections for your company for the next
three years. Use the pro forma cash flow statement for the
first year's figures and project the next according to
economic and industry trends.
- Break-even analysis - The break-even point is when a company's
expenses exactly match the sales or service volume. It can be
expressed in total dollars or revenue exactly offset by total
expenses or total units of production (cost of which exactly
equals the income derived by their sales). This analysis can
be done either mathematically or graphically.
Note: The following are actual performance statements reflecting
the activity of your business in the past. If you are a new
business owner your financial section will end here and you will
add a personal financial history. If you are an established
business you will include the actual performance statements that
follow.
- Balance sheet - Shows the condition of the business as of a
fixed date. It is a picture of your firm's financial condition
at a particular moment and will show you whether your
financial position is strong or weak. It is usually done at
the close of an accounting period and contains assets liabil-
ities and net worth.
- Income (profit and loss) statement - Shows your business
financial activity over a period of time (monthly annually).
It is a moving picture showing what has happened in your busi-
ness and is an excellent tool for assessing your business. Your
ledger is closed and balanced and the revenue and expense totals
transferred to this statement.
- Business financial history - This is a summary of financial
information about your company from its start to the present.
The business financial history and loan application are usually
the same. If you have completed the rest of the financial section
you should be able to transfer all the needed information to this
document.
VII. Supporting documents
These are the records that back up the statements and decisions
made in the three main parts of your business plan. Those most
commonly included are as follows:
- Personal resumes - Should be limited to one page and include
work history educational background professional affiliations
and honors and special skills.
- Personal financial statement - A statement of personal assets
and liabilities. For a new business owner this will be part
of your financial section.
- Credit reports - Business and personal from suppliers or
wholesalers credit bureaus and banks.
- Copies of leases - All agreements currently in force between
your company and a leasing agency.
- Letters of reference - Letters recommending you as being a
reputable and reliable businessperson worthy of being
considered a good risk. (Include both business and personal
references.)
- Contracts - Include all business contracts both completed
and currently in force.
- Legal documents - All legal papers pertaining to your legal
structure proprietary rights insurance titles etc.
- Miscellaneous documents - All other documents that have been
referred to but are not included in the main body of the
plan (e.g. location plans demographics advertising plan etc.).
Putting Your Plan Together
When you are finished: Your business plan should look
professional, but the lender needs to know that it was done by
you. A business plan will be the best indicator he or she has to
judge your potential for success. It should be no more than 30 to
40 pages long. Include only the supporting documents that will be
of immediate interest to your potential lender. Keep the others
in your own copy where they will be available on short notice.
Have copies of your plan bound at your local print shop, or with
a blue, black or brown cover purchased from the stationery store.
Make copies for yourself and each lender you wish to approach. Do
not give out too many copies at once, and keep track of each
copy. If your loan is refused, be sure to retrieve your business
plan. For a more detailed explanation of each section of the
business plan outline, see SBA's publication, How to Write a
Business Plan, which includes step-by-step directions and sample
sections of actual business plans. Also available from the SBA is
a VHS videotape and workbook, The Business Plan: Your Roadmap for
Success.
APPENDIX B: INFORMATION RESOURCES
U.S. Small Business Administration (SBA)
The SBA offers an extensive selection of information on most
business management topics, from how to start a business to
exporting your products.
This information is listed in "The Small Business Directory". For
a free copy contact your nearest SBA office.
SBA has offices throughout the country. Consult the U.S.
Government section in your telephone directory for the office
nearest you. SBA offers a number of programs and services,
including training and educational programs, counseling services,
financial programs and contract assistance. Ask about
- Service Corps of Retired Executives (SCORE), a national
organization sponsored by SBA of over 13,000 volunteer business
executives who provide free counseling, workshops and seminars
to prospective and existing small business people.
- Small Business Development Centers (SBDCs), sponsored by the SBA
in partnership with state and local governments, the educational
community and the private sector. They provide assistance,
counseling and training to prospective and existing business
people.
- Small Business Institutes (SBIs), organized through SBA on more
than 500 college campuses nationwide. The institutes provide
counseling by students and faculty to small business clients.
For more information about SBA business development programs and
services call the SBA Small Business Answer Desk at 1-800-8-ASK-SBA
(827-5722).
Other U.S. Government Resources
Many publications on business management and other related topics
are available from the Government Printing Office (GPO). GPO
bookstores are located in 24 major cities and are listed in the
Yellow Pages under the "bookstore" heading. You can request a
"Subject Bibliography" by writing to Government Printing Office,
Superintendent of Documents, Washington, DC 20402-9328.
Many federal agencies offer publications of interest to small
businesses. There is a nominal fee for some, but most are free.
Below is a selected list of government agencies that provide
publications and other services targeted to small businesses. To
get their publications, contact the regional offices listed in
the telephone directory or write to the addresses below:
- Consumer Information Center (CIC), P.O. Box 100 Pueblo, CO 81002
The CIC offers a consumer information catalog of federal
publications.
- Consumer Product Safety Commission (CPSC)
Publications Request
Washington, DC 20207
The CPSC offers guidelines for product safety requirements.
- U.S. Department of Agriculture (USDA)
12th Street and Independence Avenue, SW
Washington, DC 20250
The USDA offers publications on selling to the USDA.
Publications and programs on entrepreneurship are also available
through county extension offices nationwide.
- U.S. Department of Commerce (DOC)
Office of Business Liaison
14th Street and Constitution Avenue, NW
Room 5898C
Washington, DC 20230
DOC's Business Assistance Center provides listings of
business opportunities available in the federal government. This
service also will refer businesses to different programs and
services in the DOC and other federal agencies.
- U.S. Department of Health and Human Services (HHS)
Public Health Service
Alcohol, Drug Abuse and Mental Health Administration
5600 Fishers Lane
Rockville, MD 20857
Drug Free Workplace Helpline: 1-800-843-4971. Provides
information on Employee Assistance Programs.
National Institute for Drug Abuse Hotline:
1-800-662-4357. Provides information on preventing substance
abuse in the workplace.
The National Clearinghouse for Alcohol and Drug Information:
1-800-729-6686 toll-free. Provides pamphlets and resource
materials on substance abuse.
- U.S. Department of Labor (DOL)
Employment Standards Administration
200 Constitution Avenue, NW
Washington, DC 20210
The DOL offers publications on compliance with labor laws.
- U.S. Department of Treasury
Internal Revenue Service (IRS)
P.O. Box 25866
Richmond, VA 23260
1-800-424-3676
The IRS offers information on tax requirements for small
businesses.
- U.S. Environmental Protection Agency (EPA)
Small Business Ombudsman
401 M Street, SW (A-149C)
Washington, DC 20460
1-800-368-5888 except DC and VA
703-557-1938 in DC and VA
The EPA offers more than 100 publications designed to help small
businesses understand how they can comply with EPA regulations.
- U.S. Food and Drug Administration (FDA)
FDA Center for Food Safety and Applied Nutrition
200 Charles Street, SW
Washington, DC 20402
The FDA offers information on packaging and labeling
requirements for food and food-related products.
For More Information
A librarian can help you locate the specific information you need
in reference books. Most libraries have a variety of directories,
indexes and encyclopedias that cover many business topics. They
also have other resources, such as
- Trade association information
Ask the librarian to show you a directory of trade associations.
Associations provide a valuable network of resources to their
members through publications and services such as newsletters,
conferences and seminars.
- Books
Many guidebooks, textbooks and manuals on small business are
published annually. To find the names of books not in your local
library check "Books In Print", a directory of books currently
available from publishers.
- Magazine and newspaper articles
Business and professional magazines provide information that is
more current than that found in books and textbooks. There are
a number of indexes to help you find specific articles in
periodicals.
In addition to books and magazines, many libraries offer free
workshops, lend skill-building tapes and have catalogues and
brochures describing continuing education opportunities.
----------
End of Document
|
