Fund It: Get financing for your start-up

3 Ways to Improve Your Odds of Securing a Loan

1. Prove you can pay the money back. Provide a written analysis of anticipated cash flow and a description of any collateral that could be used as secondary repayment.

2. Present with a good track record. Know your credit score and read your complete credit report. Correct all mistakes before meeting with a banker and be prepared to explain any potential “red flags.”

3. Put some of your own money into the business. Don’t expect a loan to cover 100% of your financing needs; be willing to invest money yourself. Because if you don’t believe enough in your business to lay some money down, who else will?

You can leverage your own uniqueness.
If you are black, Hispanic, a female or a U.S. veteran, your business may be eligible for targeted financing:

MINORITIES The Black Business Loan Program (www.floridajobs.org/BBLP) provides loans, loan guarantees and/or investments through loan administrators to black business enterprises that cannot otherwise obtain capital through conventional lending institutions. In addition, Black Business Investment Corporations throughout Florida stand ready to facilitate access to capital for black business owners. Hispanic business owners may find funding information pertinent to their needs through Prospera (formerly Hispanic Business Initiative Fund Florida) at www.prosperausa.org.

WOMEN No government loan programs exist exclusively for women business owners; however, experience has shown that SBA loans are three to five times more likely to go to women than non-SBA loans. SBA financing options include 7(a) and CDC/504 loans and microloans for small-scale financing. On the local level, Women’s Business Centers can provide assistance in applying for loans and also may provide access to alternative capital financing programs.

VETERANS The U.S. Department of Veterans Affairs Office of Small & Disadvantaged Business Utilization (www.va.gov/osdbu/) offers information on small business financing specifically geared to veterans. Click on its Veteran Entrepreneur Portal for easy access to federal services and best-practices information about starting, growing and funding a business. In addition, the SBA website has an entire section devoted to business resources for veteran entrepreneurs at www.sba.gov/business-guide/grow-your-business/veteran-owned-businesses.

You can obtain a grant.
Almost no federal grant money is available to launch for-profit small businesses. However, some businesses engaged in scientific R&D may qualify for federal grants under the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs if their projects meet federal objectives and have high potential for commercialization. For details, visit www.SBIR.gov. For information about grants available through state and local programs and nonprofit organizations in Florida, visit www.floridagrantwatch.com.

You can attract a private investor.
Venture capital firms or private individuals called “angels” may be willing to invest in your venture if they see potential. They will expect something in return — some level of control and/or a percentage of future profits. Venture capital firms are often controlled by banks, insurance companies and large corporations; angels are usually wealthy individuals looking to support “hot” ideas and untapped investment opportunities. Since these types of investors will take risks only if they truly believe in you and/or your product or service, a business plan heavy on “wow” is essential. Keep in mind, however, that less than 1% of proposals for venture capital are ever actually funded.

See a list of Florida venture capital firms or visit Florida Venture Forum at www.flventure.org for more information.

You can try crowdfunding. The idea of crowdfunding as a way to underwrite small business growth was triggered by passage of the federal JOBS (short for Jumpstart Our Business Startups) Act in 2012, which allows private companies to solicit investors on the web and opens the door for anyone to become a shareholder. SEC rules lay out the specifics, including the paperwork required and limits on how much money an issuer can raise. If crowdfunding appeals to you, look to specialists at your local Florida SBDC office for advice.

Tags: Florida Small Business, Business Basics, The Game Plan