MONEY FOR YOUR BUSINESS

Grants - Loans & Capital

  Overview:  

Welcome to the world of Grants - Loans, & Capital.  There are Billions of dollars available for the asking.  People call our office daily, and ask how to get capital to fund their businesses.  Some call frustrated because they failed in their attempt to secure financing.  I can tell you two things for sure, (1) there is money out there, (2) you have to dot every (i) and cross every (t) in order to get it. 

Financial Stress Reduction cannot guarantee you a loan, grant, or other forms of capital.  No one can!  It is a web of government entanglements, and a near perfect business plan. We can help you apply.  We have a complete business start-up package available that takes you through the entire process, or you can hire us to do any part of the process.  Our web site can give you most of the information you need to do it yourself.  There is a time factor in requesting funds and receiving them.  I have seen the process go a year, and end in failure.  I have seen three months, and end in success.

Let me first outline the steps you must take to secure a grant or a loan.  You must always start at the local level.  Money flows down from the Federal Government to the States, to the County, then to the local governments.  There are 7 basic steps you must perform to get to first base in your quest for funds:

1.      Define your project ideas.

a.      Think it through on paper.

                                                                                      i.      Set a reasonable goal 6 months to one year.

                                                                                    ii.      Identify individual needs.

                                                                                  iii.      Establish a written work schedule

2.      Identify your team

a.      Attorney, Tax Preparer, Insurance Agent:

                                                                                      i.      Best type of company (entity) to own.

                                                                                    ii.      What can or should you protect.

                                                                                  iii.      You must have expertise, or have a partner that does.

                                                                                  iv.      Establish business contacts.

3.      Create a written plan.

a.      Start an outline using examples

b.      Concise readable, and exciting. (Write at 8^th grade level).

c.       Answer all questions.

d.      Seek criticism (Feedback).

e.      Check spelling and grammar.

4.      Get your business started.

a.      Obtain licenses if necessary.

b.      Set up Business entity (Corporation, LLC, Partnership).

c.       Get your tax ID number.

5.      Locate the funds needed.

a.      Grants, loans, venture capital, angel investors, alliances.

6.      Get completely ready.

a.      Secure locations, equipment, materials, personal, marketing.  Keep your plans quite. 

7.      Open your door & hit the market running (Ready - Fire – Aim).

Communication Strategies:  Top of Page

After you have dotted the (I)’s and crossed the (T)’s you will have to present your plan to the group that has interest in either funding your project or lending you the money.  They want to make sure that you are an expert enough to succeed in the business.  Before you meet fact to fact with the committees, you will have to call and talk to the write person.  Below are a few tips on talking to various agencies.  In fact these tips work for anyone anytime.

1.   Have a great Attitude – Make a friend – Use paper & pen

a. Hi this is __, whom am I speaking with.

                                      i.      Write down their name.

2.   Be optimistic, humble, & polite.

a.   Always tell people than can help you.  Don’t ever tell them “I don’t think you are the person who can help me.”  They will agree with you.

3.   Be open, candid and truthful.

4.   Be concise and get to the point.

5.   Describe Project & Benefits instead of I need money.

6.   Send everyone you talk to a professional hand written thank you note.  Don’t send Internet email thank you, or pre-printed cards.

7.   Politely be persistence on your callbacks.  Remember, they won’t tell you to come in for your money after the first call.

8.   Mirror the people you talk to.  Be on the same emotional level as the person you are talking to.

Grants:  Top of Page

Grants are given to solve societal problems, not to give money for the benefit of a business.  Funding agencies need vehicles to solve their problems.  They make investments in the community not charity contributions to businesses.  Applying for a Grant is a process, not an event.  Be realistic when you apply, they have heard it all.

 Your proposal will become a contract.  You must do what you propose to do.  They will build in verification steps along the way to make sure the money goes to the project you proposed.

 The money comes from a number of sources:

1.      Federal, State & Local governments

2.      Foundations – Foundations must pay out at least 5% of their earnings.

3.      Corporations

4.      Individuals.

 Profit or Non-Profit ?   Top of Page

 You can have either a profit, or non-profit organization.  If you decide on a non-profit organization, you must:

1.      File for a fictitious name.

2.      Set up your organization as a 501-C-3

 Do you need a Proposal or an Application?

1.      Match the correct project idea to the correct funding agency.

2.      Prepare an application, proposal, or a combination of the two.

3.      Each funding agency makes their own decision.

4.      Determine how they want you to submit the information.

 Successful Grant Proposals:   Top of Page

 There are five essential parts to a grant proposal.

1.      Mission Statement – Objectives, goals, (Executive Summary or Overview).  Tell the whole story in 2 or 3 paragraphs.

2.      Justification – Why should you be funded?  Expertise or partner?  How many people will benefit when your project is completed.

3.      Procedures – Produce a time line of events.  How will your project progress.  Use 60 to 90 days and make sure your project manager (Contact person) information is available.  Usually placed on proposal cover page.

4.      Evaluation – A system of reports on how you are doing.  Suggest how you plan to report your progress.  Don’t make them tell you.

5.      Budget – Payroll, equipment, supplies, sub-contractors, etc.  Do you need the funds for your start-up or operating, or both?  Produce a concise budget.  Use other budgets as an example.  Get professional help if unsure.  Remember, they expect you to be an expert in what you do, and have ability to get expert advice when you need it.  If any part of the project looks non-professional, you won’t get the money.

 The Small Business Administration:   Top of Page

The U.S. Small Business Administration, established in 1953, provides financial, technical and management assistance to help Americans start, run, and grow their businesses. With a portfolio of business loans, loan guarantees and disaster loans worth more than $45 billion, in addition to a venture capital portfolio of $13 billion, SBA is the nation's largest single financial backer of small businesses. Last year, the SBA offered management and technical assistance to more than one million small business owners. The SBA also plays a major role in the government's disaster relief efforts by making low-interest recovery loans to both homeowners and businesses.

America's 25 million small businesses employ more than 50 percent of the private work force, generate more than half of the nation's gross domestic product, and are the principal source of new jobs in the U.S. economy.

Small Business "Vital Statistics"   Top of Page

Did you know that?

·         There are approximately 25 million small businesses in the U.S.?

·         New business formation reached another record level in 1998?

·         There were 898,000 new employer businesses in 1998 -- the highest ever and a 1.5     percent increase over the record of 889,000 new businesses in 1997?

·         In 1998, seven of the 10 industries, which added the most new jobs, were in sectors dominated by small businesses? (U.S. Department of Labor, U.S. Department of Commerce)

·         Small businesses hire a larger proportion of employees who are younger workers, older workers, women or workers who prefer to work part-time?

·         Small businesses provide 67 percent of workers with their first jobs and initial on the job training in basic skills?

·         Small business bankruptcies are the lowest in 19 years?

Small businesses…

·         Provide approximately 75 percent of the net new jobs added to the economy.

·         Represent 99.7 percent of all employers.

·         Employ 53 percent of the private work force.

·         Provide 47 percent of all sales in the country.

·         Provide 55 percent of innovations.

·         Account for 35 percent of federal contract dollars.

·         Account for 38 percent of jobs in high technology sectors.

·         Account for 51 percent of private sector output.

·         Represent 96 percent of all U.S. exporters.

 How do I get a Small Business Loan:   Top of Page

You should prepare a business plan, including your loan proposal and submit it to a local lender.  If the lender is unable to approve your loan, you may request that the lender, submit your application, to the SBA. The SBA can guaranty up to 80% of a small business loan; however, the lender must agree to loan the money with the SBA guaranty. The lender will then forward your loan application and a credit analysis to the nearest SBA District Office.  If the lender needs SBA applications and/or guidance it may contact the nearest SBA District Office.  The SBA website is.  They have a wealth of information on starting a small business.  Financial Stress Reduction offers a complete business service package.  Our services included setting up your business, writing your business plan, setting up your accounting system, and filing your taxes.  We do it all for you.  We also are available to do segments of your plan.  A work of caution, you must fit your business plan to match criteria for a grant.  The grant committees will not change their criteria or business plan for you.  The SBA has their guidelines.  You must match your business plan to their criteria also.  Your entire project must have one theme.  Don’t mix criteria.

Other Types of Funding Available for Your Business.    Top of Page

  Angel Investors – Individuals or groups of investors that fund start –ups or early state developments.  They usually want equity in your company.  They don’t want active participation.

 Equity / Leveraged Venture Capitalist (SIBCs) – Professional investment groups primarily invest in high growth companies.  They provide assistance in all phases of your business, and they want power in the company.

 Strategic Partners / Alliances – Joint venture with another company.  Adds cash & creditability.  Better terms than Venture Capitalist.