There are a variety of financing programs available to help your business grow. While the Small Business Administration (SBA) is the main resource for small business owners, it is not the only one. Each state has a Small Business Development Center (SBDC) to provide management assistance to current and prospective small business owners. If you are looking to start or expand a small business, contact your local SBDC to see if they can help you. In addition, be sure to read up on business loan programs for minorities.

SBDCs offer one-stop assistance to individuals and small businesses by providing a wide variety of information and guidance in central and easily accessible branch locations. The program is a cooperative effort of the private sector; the educational community; and federal, state, and local governments. Here are some of the loan programs your SBDC may offer:

504 loans are offered directly through approved local economic development agencies. The financing agency is limited to 40 percent of the project but not to exceed $1 million.

Community Adjustment & Investment Program (CAIP) loans are available to businesses at risk due to trade pattern changes in Canada and Mexico.

Microloans are great for borrowers seeking smaller loan amounts. Microloans are offered directly through approved local economic development agencies, and are available for amounts up to $25,000. The downside to these loans is that the interest rates generally are much higher than SBA-guaranteed loans.

Industrial Development Revenue Bond programs (IDRB) are for financing business and industrial expansions for firms with strong credit. Bond proceeds can only be used to acquire land, building and equipment. Working capital and inventory are not eligible for this type of financing. These bonds are generally used when financing of $1 million and higher is required.

These bonds are issued by county or state agencies and purchased by private parties. The borrower is responsible for paying the principal, interest, and other costs of the bonds paid solely by the beneficiary company. In order to participate in this program, either as the borrower or bond purchaser, a company may not have participated as an owner or principal user in any tax-exempt financing totaling more than $40 million.

IDRBs may finance up to 100 percent of project costs, with loans up to $10 million for tax-exempt bonds, and no limit if the bond is taxable. Because of the cost of administrating these bonds, they are best for projects valued at $1 million or more. Interest rates on IDRBs may be fixed or variable, and maturities can range from five to 30 years.

Is My New Business Idea A Good One?

For every great business idea there are scores of others that just won’t work. You will save yourself a great deal of time, trouble and money if you put your ideas to the test before you try to implement them. Half an hour of careful thought, an afternoon of research, or a phone conversation with a knowledgeable friend might steer you away from a flawed idea — and months of wasted effort and thousands of dollars of losses.

Moreover, the process of testing your ideas will help you determine the kinds of things to take into account when you’re creating a business concept. Eventually, your efforts will help lead you to an idea that has a solid chance of success.

Unlike giant corporations that invest huge sums of money to test potential toothpaste flavors or product names, you probably won’t have to spend a lot of time or money to evaluate your ideas. If you don’t know your target market and haven’t done some basic market research chances are you won’t succeed.

Begin with these simple steps:

1. Ask your friends and associates to help you evaluate the concept. If you know successful entrepreneurs, ask them what they think of your idea. Chances are, they’ll think of problems you are likely to encounter. You may be willing to face those obstacles — or you might decide that some of them are insurmountable.
2. Ask potential customers how much they’d pay for your product or service. Their answers will help you focus on your potential market, and will give you a sense of how strong that market is. Once you have some answers to this question, you can begin to estimate your prospective firm’s potential revenues.
3. Consider whether you are excited about the idea. Will you actually enjoy the work that will be required to make your venture a success? If not, move on.

The Feasibility Study: Getting Down to Details

If your initial research and thinking turns up positive results, begin work on a feasibility study. The study can take the form of a formal document that will help you recruit potential partners, investors, or lenders. Alternatively, however, it can be a simple memo to yourself — a series of questions designed to help you decide whether you should proceed to the next level of commitment.

Either way, your feasibility study should address the following issues, each of which will require in-depth consideration:

1. The product or service. What are its unique features? How will it be designed, manufactured, and delivered to customers?
2. The management team. Does your team have experience in the industry? What skills or qualifications are missing from the current team?
3. The market. Who are the target customers? How big is the potential market? Is the market growing? What are the costs required to reach the target market?
4. The competition. Who are your major competitors? Is your product or service superior to the competition? Would it be easy for competitors to duplicate your product or service? What are your competitors’ strengths and weaknesses? How will competitors respond when your firm enters their market?
5. The costs. What will it cost to start and run your business? Where will you raise the money?

What Is Involved in the Due Diligence Process for Venture Capital Financing?
Before investing in a company, a venture capital firm goes through a stringent review process to ensure that there are no skeletons in your corporate closet and that the perceived business opportunities are in fact real. The due diligence process generally focuses on two aspects: business diligence and legal diligence.

The business due diligence process accomplishes several objectives. First of all, it is important for the venture capital firm to independently confirm your assertions about your company’s product or service and the market itself. Thorough competitive and financial analyses will help investors gauge the risks they will be assuming and the potential return on their investment. If your business plan hinges on technology, the venture firm will also need to assess your technology to make sure that there are no flaws in or infringements on patents, for instance.

If you are seeking later-stage funding, the venture firm will also contact key customers and suppliers to do reference checks. Industry experts may also be called on to discuss your company’s potential.

In addition, because the success of your company hinges on a strong management team, it is important for investors to gain a complete sense of the company and the key players. Background checks are not unusual and your culture, management approach, and decision-making and problem-solving skills will be judged.

Legal due diligence is performed to ensure that all legal matters have been correctly and completely addressed. The firm’s lawyers will request a comprehensive list of documents. See the sample due diligence checklists at AllBusiness.com. Because this is standard operating procedure, make sure that all your legal documents are in order and you are prepared for their requests.

The checklist of requested documents will typically include the following:

•Key contracts
•Employment agreements
•Minutes and consents of the board of directors and shareholders
•Confidentiality and invention assignment agreements with employees
•Corporate charter and bylaws
•Litigation-related documents
•Patents, copyrights, and other intellectual property-related documents.
•Past financing agreements and shareholder agreements

The due diligence process can be time consuming. It will involve multiple meetings and interviews with management, at both the investor’s and your offices. Make sure you anticipate questions and requests particular to your business and you are well-prepared and have all the necessary documents organized.

When starting a business, it is beneficial to create a distinct business credit profile apart from your personal credit profile. A D&B credit file can be critical in obtaining a loan or achieving favorable payment terms. Many organizations, including Wal-Mart and the U.S. Government, will only do business with companies that have a D&B D-U-N-S® Number.

By improving your business’s scores and rating (D&B’s Financial Stress Score, Commercial Credit Score and D&B Rating), you can negotiate better credit terms and rates with your business partners.

CreditBuilder a D&B product is ideal for small businesses who:
•Need to establish their basic credit file and rating for the first time
•Need an expedited D-U-N-S® Number within 24 hours
•Are looking to separate business credit from personal credit for the first time

By all means investigate other credit building software. In business good credit positively impacts the bottom line.