Financing

One key to a successful business start-up and/or expansion is your ability to obtain and secure appropriate financing. Raising capital is the most basic of all business activities. But as many new entrepreneurs quickly discover, raising capital may not be easy; in fact, it can be a complex and frustrating process. There are several sources to consider when looking for financing. It is important to explore all of your options before making a decision.

• Personal Savings: The primary source of capital for most new businesses comes from savings and other forms of personal resources.
• Angel Investors: Many entrepreneurs look to private sources such as friends, family, and other private sources when starting out in a business venture. Often, money is loaned interest free or at a low interest rate, which can be beneficial when getting started.
• Banks and other private lending institutions: The most common source of funding, banks and credit unions, will provide a loan if you can show that your business proposal is sound (a business plan is an essential part of this process).
• Venture Capital Firms: These firms help expanding companies grow in exchange for equity or partial ownership.

What to Take to the Lender

• Business Plan
• Purpose of the Loan.
• Sources and uses of loan funds.
• Financial statements for last three years (existing businesses).
• Amount of investment in the business by the owner(s).
• Projections of income, expenses and cash flow.
• Signed personal financial statement.
• Personal tax returns for last three years.

As part of BrightBridge, the BBIWBC is actively involved in financial deal structuring and participates in the packaging of the following loan programs:

Internal Loans – The BBIWBC has two internal loan funds, which are limited in scope and cannot exceed $150,000.

IRP – The Intermediary Relending Program is for Rural Development in the Tennessee counties of: Bledsoe, Bradley, Grundy, Hamilton, Marion, McMinn, Meigs, Polk, Rhea, and Sequatchie (IRP funds are not available for use in cities which have a population greater than 25,000). The maximum loan amount available is $150,000 and can only be used for major capital purchases, real estate, expansions, permanent working capital, and business acquisition.

EDA – The EDA Revolving Loan Fund (RLF) is available in the Tennessee counties of: Bledsoe, Grundy, Hamilton, Marion, McMinn, Meigs, Polk, Rhea, and Sequatchie, and the Georgia counties of: Dade and Walker. The maximum loan amount available is $150,000 and can only be used for purchasing equipment, real estate, other fixed assets, or permanent working capital. Two important aspects of this program are that for each $1.00 of RLF financing invested in a project, a minimum of $2.00 in private investment is required as a match, and one new job must be created or retained for each $10,000 of RLF monies borrowed.

SBA Loans – The SBA’s loan guaranty programs provide a key source of financing for viable small businesses that have real potential, but cannot qualify for loans from traditional sources. Financing programs provided by the SBA vary according to a borrower’s financial need. SBA loans are made by private lenders and are guaranteed up to 85 percent.

The BBIWBC packages the following SBA loans:

7(a) – The 7(a) Loan Guaranty Program is one of SBA's primary lending programs. It provides loans over $150,000 to eligible, creditworthy, start-up and existing small businesses unable to secure financing on reasonable terms through normal lending channels. Loans are available for most business purposes, including the purchase of real estate, machinery, equipment, and inventory, or for working capital. The loans cannot be used for speculative purposes. The program operates through private-sector lenders that provide loans, which are in turn, guaranteed by the SBA -- the SBA has no funds for direct lending or grants.
www.sba.gov/financing/fr7aloan.html

504 – The 504 Certified Development Company (CDC) Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. A Certified Development Company (BBIWBC is the CDC in the region serving the SEWBC) is a nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the SBA and private sector lenders to provide financing to small businesses. The 504 is the SBA’s economic development instrument that supports American small business growth and helps communities through business expansion and job creation. This program provides growing businesses with long-term, fixed-rate, subordinate mortgage financing for acquisition and/or renovation of major fixed assets including land, buildings and equipment.
www.sba.gov/financing/frcdc504.html

LowDoc – The Low Documentation Loan is one of the SBA’s most popular programs and follows the basic criteria of the 7(a) program. Once you have met your lender’s requirements for credit, LowDoc offers a simple two-page SBA application form and rapid turn-around on approvals for loans up to $150,000. Loan proceeds may be used for the purchase of real estate, machinery, equipment, and inventory, or for working capital, but may not be used to repay certain types of existing debt.
www.sba.gov/financing/frlowdoc.html

Pre-Qual – The Pre-Qualification Loan Program provides substantive support and assistance in the loan application process to women, veteran, and minority-owned businesses. The program focuses on the applicant’s character, credit, experience and reliability and enables the SBA to pre-qualify an applicant for a 7(a) loan guaranty on a loan application of $250,000 or less before the applicant goes to a bank.
www.sba.gov/financing/frprequal.html