One of the major barriers for today's small business is access to the capital that is necessary for growth. Without adequate financing, many small businesses are prevented from purchasing equipment, inventory, or real estate. There are various sources of financing to consider, and the SBDC can assist you in identifying and securing the appropriate source of funds for your business venture. Your local SBDC offers one on one financial counseling, workshops and loan packaging as well as assistance with preparing your business plan and financial documents. Our staff of experts have years of experience and relationships with many lending institutions, and will help you identify the right mix of products to help you reach your business goals. Listed below are some of the most common sources of funds. Contact your local SBDC for assistance with your financing needs

Micro loans
Micro loans are smaller loans, made to eligible borrowers in amounts that range from $100 to a maximum of $25,000. The micro loans were created to increase the availability of funds under $25,000 to small business owners because traditional lending institutions have typically not made such small loans. Additionally, the lending criteria for a micro loan may not be as stringent as those established by commercial lending sources. This has made it possible for funds to be available to women, low-income and minority entrepreneurs, business owners, and other individuals possessing the capability to operate successful businesses but lacking in areas such as perfect credit or personal assets. Loan proceeds can be used for working capital; equipment; furniture and fixtures; inventory; and leasehold improvements. The proceeds cannot be used to refinance existing debts. Contact your local SBDC for assistance in determining if a micro loan is right for your business venture.

Commercial Bank Loans
The kind of financing most entrepreneurs seek through commercial lenders is debt financing. Most banks provide debt financing for existing and start-up businesses. When shopping for a loan, keep in mind that banks vary substantially in their lending practices. While one bank may decline your loan application, another may be willing to take a higher risk or be interested in lending to small businesses. It is advisable to understand a bank's lending guidelines before applying for a loan. Keep in mind that submitting your loan package to more than one lender simultaneously can affect your overall credit score. Therefore it is important to know as much as possible about the banks lending practices before submitting your loan package. The general guidelines that would enable a lending officer to at least make an informed decision regarding your loan proposal are:

1. Detailed business plan with 3 years cash flow projections
2. Collateral
3. Down Payment (or equity in an ongoing business)
4. Credit history and personal financial net worth
5. Management ability
6. Ability to repay the debt

If you feel that a loan would help you realize goals for your business, then contact your local SBDC to ensure that your package is complete. Because we have relationships with many area banks, we can help you determine which lending vehicle is best for you. We'll help you to put your best foot forward when meeting with your lender for the first time.

Accounts Receivable Financing/Factoring
Factoring is the selling of a company's accounts receivable, at a discount, to a factoring agency, which then assumes the credit risk of the account debtors and receives payment as the debtors settle their accounts. Factoring can provide a quick turnaround and convenient funding to growing companies who need capital to expand their business. Factoring is not a loan. There is no debt repayment, and long-term agreements are not necessary. For their services, Factoring agents are paid a fee, which is typically based on a percentage of to accounts receivable. Because there are other factors to consider, you should contact your local SBDC to get assistance in determining if factoring is the right option for your business.

SBA Loans

	7(a) Loan Program The 7(a) Loan Guaranty Program is one of SBA's primary lending programs. It provides loans to small businesses unable to secure financing on reasonable terms through normal lending channels. The program operates through private-sector lenders that provide loans which are, in turn, guaranteed by the SBA -- the Agency has no funds for direct lending or grants.
	Community Express Community Express is a pilot SBA loan program that was developed in collaboration with the National Community Reinvestment Coalition (NCRC) and its member organizations. Under the pilot, which is available to selected lenders, an SBA Express like program will be offered to pre-designated geographic areas serving mostly New Markets small businesses. The program will also include technical and management assistance, which is designed to help increase the loan applicant's chances of success.
	CAPLines The CAPLine is the umbrella program under which the SBA helps small businesses meet their short-term and cyclical working-capital needs. A CAPLines loan can be for any dollar amount (except for the Small Asset-Based Line described below). There are five short-term working-capital loan programs for small businesses under the CAPLines umbrella: SEASONAL LINE: These are advances against anticipated inventory and accounts receivable help during peak seasons when businesses experience seasonal sales fluctuations. Can be revolving or non-revolving. CONTRACT LINE: Finances the direct labor and material cost associated with performing assignable contract(s). Can be revolving or non-revolving. BUILDERS LINE: If you are a small general contractor or builder constructing or renovating commercial or residential buildings, this can finance direct labor-and material costs. The building project serves as the collateral, and loans can be revolving or non-revolving. STANDARD ASSET-BASED LINE: This is an asset-based revolving line of credit for businesses unable to meet credit standards associated with long-term credit. It provides financing for cyclical growth, recurring and/or short-term needs. Repayment comes from converting short-term assets into cash, which is remitted to the lender. Businesses continually draw from this line of credit, based on existing assets, and repay as their cash cycle dictates. This line generally is used by businesses that provide credit to other businesses. Because these loans require continual servicing and monitoring of collateral, additional fees may be charged by the lender. SMALL ASSET-BASED LINE: This is an asset-based revolving line of credit of up to $200,000. It operates like a standard asset-based line except that some of the stricter servicing requirements are waived, providing the business can consistently show repayment ability from cash flow for the full amount.
	LowDoc The SBA LowDoc is a streamlined loan program which seeks to ensure a faster turnaround for businesses in need of financing. The maximum loan is $150,000, and calls for a response from the SBA within 36 hours of receiving a complete application
	The Export Working Capital Program (EWCP) The SBA's Export Working Capital Program (EWCP) supports export financing to small businesses when that financing is not otherwise available on reasonable terms. The program encourages lenders to offer export working capital loans by guaranteeing repayment of up to $1 million or 90 percent of a loan amount, whichever is less. A loan can support a single transaction or multiple sales on a revolving basis. Designed to provide short-term working capital to exporters, the EWCP is a combined effort of the SBA and the Export-Import Bank. The two agencies have joined their working capital programs to offer a unified approach to the government's support of export financing. The EWCP uses a one-page application form and streamlined documentation with turnaround usually 10 days or less. A letter of prequalification is also available from the SBA.

For more details on the SBA Loans and qualification criteria, visit www.sba.gov or contact your local SBDC.

Venture Capital
Venture capital organizations can also help with starting or expanding a business. Financing through a venture capitalist is different from borrowing from a lender because, instead of earning interest, they take an equity stake (part ownership) in the business, and it might be substantial. The advantage of equity financing is that this infusion of capital does not have to be repaid like a loan. The venture capitalist earns a profit through dividends paid to shareholders of the company and through appreciation in the value of the stock of the company.

As a condition of investing funds in a business, venture capitalists often have the right to review management decisions and, in some cases appoint their own managers to oversee certain aspects of the business. While the entrepreneur typically retains day-to-day management control of the company, the venture capitalist has some control over the strategic direction of the business.

Thus, highly independent entrepreneurs must think carefully before accepting venture capital. Not only will venture capitalists be entitled to a significant portion of the profits of the company, but they also take away much of the autonomy of the entrepreneur.

Loan Packaging
The SBDC's team of loan consultants provides lending guidance and loan packaging services at little or no cost. This specific area of consultation includes assistance with financial projections, the statement of sources and uses of funds, the business plan, and the determination of appropriate sources of financing. The SBDC works closely with area banks; assists viable clients with business plans and applications process. Plan to take one of our comprehensive workshops to learn how to prepare your business plan and financial information, then meet with one of our consultants who will use that information to analyze your ability to qualify for a business loan. Then, your counselor will help determine what loan program is most suitable for your business. Call your local SBDC for a schedule of upcoming workshops or to schedule an appointment.