Tag Archives: small-business
How to Prepare for Government Grants to Start a Business
The fact is that the US government gives out billions in government grants to start a business each year. Sound like a lot of money? Well would you believe that the federal government gives away a total of $25 billion in domestic business aid, all together each year?
However; the truth of the matter, is that in spite of there being such a large available pool of money, competition is stiff. This of course means that the people who are the most prepared and knowledgeable, generally tend to walk away with the lions share.
The First Thing to Do
The very first thing that you need to do is to come up with a complete and comprehensive business plan. Not just a good plan but rather, an excellent plan. Consider using the Internet to conduct your market demand research.
Your plan should also demonstrate your complete familiarity with all the products involved in the business you are proposing. You should also be able to demonstrate a complete familiarity with employee wage scales for the type of labor performed in the course of your business.
The Second Thing to Do
The second thing you can do, is to begin to work on your presentation skills. You see, you have to understand that aside from all the paperwork you’ll have to submit, there will be personal interviews. People you will have to convince that your plan is viable.
The Third Thing to Do
The third thing that you will need to do is to familiarize yourself with the entire process of getting government grants to start a small business. This is no time to learn on the fly. There’s just too much at stake. Consider paying for the services of a consultant.
1) Before you start applying for grants, make sure that you have your business planned meticulously. Be prepared with an excellent business plan, with the exact amounts and figures that you require in every aspect of your business such as overhead, manpower, facilities and other expenses. Once you have the figures in place, add an extra 25-30% to this amount as a contingency measure to safeguard you against unexpected expenditure. A well-planned business plan could work wonders towards you obtaining a good grant to help you with your business.
2) Engage in the services of a consultant to help you find and obtain a small business grant. Although this may prove to be slightly costly to you, but the experience and knowledge that the consultant brings for your grant application could prove to be priceless, and may be the deciding factor in you obtaining it, or failing in your bid.
3) Use the internet and available website to good effect. Visit relevant sites such as the Catalog of Federal Domestic Assistance (CFDA) where you could find a list of small business grants that you could apply for, as well as the Small Business Administration (SBA) website where you would discover all the information required in regards to grant applications here. Other useful sites especially for women entrepreneurs include usagovernmentgrants.org, and of course grants.gov, a government-linked site where your grant-seeking activities could bear fruit.
4)Do not forget to work on your presentation skill as well, as you would be required to present in front of a grant-awarding committee. Thus be prepared to impress them with your proposal, and all the best in obtaining the small business grant for yourself!
504: the SBAs Shining Star (Page 1 of 2)
The U.S. Small Business Ad-ministrations (SBA) loan programs have garnered much criticism over the years. Some complaints may have been warranted in the past, but these days, the SBA is different.
Increased accountability and newly implemented efficiencies are a terrific development for U.S. taxpayers and for Americas small-business owners. As we see these changes, I think industry members should work to remove the stigma that exists about certain SBA loans.
Many entrepreneurs and far too many brokers, ironically dismiss the SBA because of its more well-known 7(a) lending program. This program is most often in the news and nearly always seems to be in crisis or in need of supplemental appropriations. Whether or not the 7(a)s reputation is deserved, its negative attention has managed to tarnish other effective and lesser-known SBA programs. But 7(a)s parameters do not apply to all SBA programs, despite some brokers thinking otherwise.
In my opinion, the SBA deserves its budget more than $22 billion because of one program: the SBA 504 loan program. It is for small-business owners who want to acquire or construct their own facilities. Despite fallacies surrounding it and the SBA, this little-used program can be an important tool.
The 504 program provides small-business owners with 90 percent loan-to-cost financing for most commercial real estate projects. These loans are structured with a conventional mortgage for 50 percent of the total project cost, combined with a government-guaranteed bond for 40 percent. The remaining 10 percent is the borrowers equity and is usually half as much as traditional lenders require. This lowers the risk for small-business owners as opposed to lowering the lenders risk profile with more capital injected into the real estate.
These loans are meant to finance total project costs. The first mortgage is typically a fully amortizing 25-year term at market rates, while the second mortgage is a 20-year term but with the interest rate fixed for the entire term at below-market rates. For small-business owners, these loans and terms can provide the highest cash-on-cash return available in the commercial-mortgage industry. Still, myths about it exist.
Myth No. 1: SBA loans take too long The SBA is aware of small-business owners time and of how busy they are. Its certified development companies (the SBAs representatives on these loans) now move quickly. They often can examine borrowers underwriting documents in only 48 hours. Once lenders scan their borrowers documents, they can actually drag and drop them onto some of the certified development companys or SBAs secure servers. This technological innovation saves the time of doing overnight mail and is a huge improvement in the slow-adapting commercial-mortgage industry. If an SBA loans approval process takes more time than this, it may be that a particular lender is holding it up.
Myth No. 2: SBA loans have too much paperwork There have been great efforts to streamline the overall application process. In some cases, they can nearly match the paperwork of what any ordinary 80 percent loan-to-value conventional commercial lender would need to approve a loan. Some borrowers find this paperwork is far less than what they had to complete when they refinanced their home loan. Specialized commercial lenders have helped this along, too.