“While poor management is cited most frequently as the reason businesses fail, inadequate or ill-timed financing is a close second.” – Small Business Administration
Once a fledgling entrepreneur has chosen a business and written a business plan financing must be secured. There are two main types of financing. They are:
Debt Financing – loans from banks, savings and loans, commercial finance companies, the U.S. Small Business Administration (SBA), or state and local governments. There are two kinds of debt financing:
Direct Loan – money given directly to the borrower.
Loan Guaranty – money promised by another agency to a bank, which will then loan the business money.
Equity Financing – money from investors. An investor buys part of the business and gives the entrepreneur money to start or expand the business. Investors can be friends, relatives, employees, customers, industry colleagues, or professional investors (venture capitalists). The SBA licenses Small Business Investment Companies.
Federal Resources
The United States Small Business Administration – The SBA was created to “aid, counsel, assist and protect the interests of small business concerns.” Call the SBA Answer Desk at 800-U-ASK-SBA (800-827-5722) or go to www.sba.gov .
Minority Business Development Agency (MBDA ) – The MBDA is p art of the U.S. Department of Commerce and is the only federal agency created specifically to foster the establishment and growth of minority-owned businesses in America . Visit the MBDA website at www.mbda.gov/ or call 312-353-0182.
Office of Women's Business Ownership (OWBO) – The OWBO is part of the SBA. Its goal is to help women ”achieve their dreams and improve their communities by helping them start and run successful businesses, regardless of social or financial disadvantage, race, ethnicity, or business background.” Call the OWBO at 800-827-5722 or go to www.sba.gov/ .
Patriot Express Pilot Loan Initiative is an SBA program for “veterans and members of the military wanting to establish or expand a small business.” For more information, call the SBA at 800-U-ASK-SBA (800-827-5722) or visit their website at: http://www.sba.gov/ .
United States Department of Agriculture, Rural Development Business and Cooperative Programs – Assists business development in rural America by “working in partnership with the private sector and the community-based organizations to provide financial assistance and business planning.” For more information, call the USDA at 614-255-2420 or go to www.rurdev.usda.gov/ .
State Resources
Ohio Department of Development, Office of Small Business – The Office of Small Business “provides assistance to business owners in order to encourage both the starting up and the expanding of small businesses throughout the State of Ohio .” Call 614-466-2718 or visit www.odod.state.oh.us for more information.
Ohio Department of Development, Division of Minority Business Affairs – The Division's Minority Contractors and Business Assistance Program (MCBAP) office “assists minority entrepreneurs with loan and bond packaging services, management, technical, financial, and contract procurement assistance.” Call 800-848-1300or visit www.odod.state.oh.us/ for more information.
Small Business Development Centers of Ohio (SBDC of Ohio ) Women's Business – The Ohio Women's Business Resource Network (OWBRN) provides “long term-counseling and training in all aspects of owning or managing business, especially in the area of finance and marketing.” Call 614-224-5688 or visit www.odod.state.oh.us/ for more information.
Ohio Department of Agriculture (ODA), Family Farm Loan Program – This program helps “farmers and agribusiness enterprises secure low interest loans to start or expand a farm or agribusiness.” Call 614-728-4937 or visit www.ohioagriculture.gov/ for more information.
Ohio Treasurer's GrowNOW program – The Ohio Treasury offers a program called GrowNOW, which provides a 3% interest rate reduction on loans to Ohio small businesses of all kinds for job creation. Call 800-228-1102 or visit www.GrowNOW.ohio.gov for more information. Veterans receive preference.
Ohio Treasurer's Ag-Link Program – This program provides reduced-rate financing to Ohio farmers to help offset the high cost of borrowing for operating funds. Call 800-228-1102 or visit www.tos.ohio.gov for more information.
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