Need help getting financing?
Here are some resources to help:
- January 27, 2011
The Virginia Small Business Financing Authority
The Virginia Department of Business Assistance helps businesses and nonprofit organizations raise capital through combinations of public and private financing through the Virginia Small Business Financing Authority.
Only small businesses with specific credit standards are eligible for financing through the authority. Businesses must meet one of the following criteria: have fewer than 250 employees, have less than $10 million in revenues for the past three fiscal years, have a net worth of $2 million or less, or be a nonprofit organization classified under the 503(c)(3) tax-exempt status by the Internal Revenue Service.
The authority, a political subdivision of Virginia, offers financing through three primary means.
- Direct lending. The authority works with banks and other lenders to provide direct loans for fixed asset purchases, such as land, buildings and equipment. The authority also provides direct loans through specific programs that promote Virginia tourism and that assist day-care centers and family home providers.
- Indirect lending. The authority provides loan guarantees to commercial banks to promote lending to small businesses.
- Conduit financing. The authority can issue non-exempt industrial development bonds for manufacturers and 501(c)(3) organizations.
For more detailed information on the authority visit http://www.dba.virginia.gov/vsbfa.shtml or call (866) 248-8814.
U.S. Small Business Administration loans
The U.S. Small Business Administration does not offer direct loans, but helps small businesses raise equity primarily through guaranteeing loans for companies that otherwise would not qualify for loans from conventional lenders. Here are examples of three types of SBA-backed loans. Visit http://www.sba.gov for details on these and other SBA loan programs.
7(a) Loan Program
The 7(a) Loan Program is the SBA’s primary loan because of its flexibility in structure, variety of uses permitted and availability. The SBA guaranty reduces the lender’s risk, because lenders can recover most of the loan’s value if the borrower defaults.
Lenders must certify that the lender would not be eligible for the loan without the SBA guaranty.
To be eligible for the 7(A) loan program, businesses must be classified as small by the SBA. This varies among industries.
The proceeds can be used for a variety of business-related items, such as purchasing machinery, equipment, fixtures, and supplies, leasehold improvements, land and buildings, financing seasonal lines of credit or constructing commercial buildings. It can not be used for employee salaries, research and development or other investments.
This is provided for lenders who need a loan of $350,000 or less. The SBA will guarantee up to 50 percent of the loan. These loans do not require a SBA application.
CommunityExpress Pilot Loan Program
This provides business financing and management and technical assistance to businesses established in distressed or underserved markets. This features an expedited loan review and approval process
The Microloan program provides small loans that range from $500 to $35,000. The SBA gives funds to nonprofit organizations, which make loans to small businesses. Interest rates are negotiated with the organization. These can be used for normal business programs, such as capital, inventory and leasehold improvements.
Export Trade Financing
These are short-term loans for businesses that export goods and services. The money can be used for manufacturing goods to export, buying goods and services to export or for purchasing inventory to export or that is needed to manufacture goods to export.
Certified Development Company Loans
These loans were created as part of an economic development program to help communities through small business growth. The long-term loans can be used for the purchase or renovation of land, buildings and equipment.