Centers help small businesses access capital.

Access to capital is one of the most important phases of a three-phased service offering to help small businesses in California. Free consulting services and special classes and workshops make the other components of what a Small Business Development Center (SBDC) has to offer small businesses.

The Glendale-Burbank SBDC office is an example of a true "Capital Access" hub--with a territory that spans all of Los Angeles County and Ventura County and is situated at the base of the Los Angeles District Offices of SBA in Glendale, the 3rd largest financial center in the State.

Looking at the Glendale-Burbank SBDC office as an example, here's an overview of the kinds of services available to businesses looking for capital:

Financial Consulting Services

For those businesses seeking financial assistance, a qualified financial consultant from the Small Business Development Center will sit down with the business owner and analyze the business' ability to qualify for financing and help to determine which product is most suitable. The Center assists the business in meeting loan requirements and will package together appropriate information for loan requests. The SBDC targets businesses that do not qualify for traditional sources of financing. It provides resources for alternative sources of financing and when necessary will assist businesses in identify ways to improve their financial position. It offers assistance with cash flow projections, credit analysis, and bank referrals. It does not, however, negotiate on the behalf of its clients.

SBA Small Business Administration Pre-Qualification Loan Program

SBA's pre-qualification loan program was created for businesses that are at least 51% women, minority or veteran owned. Applicants typically do not meet traditional banking criteria, and this process helps qualified applicants become "pre-qualified" by the SBA. SBA loan guarantees were created to reduce the risk for financial institutions by providing government guarantees of up to 80% of the loan amount. Loan requests up to $250,000 can be used for normal business purposes such as equipment and inventory purchases, working capital, debt restructuring, construction and real estate purchases.

SBA Small Business Administration Microloan Program

The Microloan program provides financing to existing and start-up businesses as well as home-based companies and sole proprietorships. Loans are from $1,000 to $35,000 for a 3-5 year term.

California Small Business Facts

A statistical overview of our state's business landscape can be helpful in understanding what's needed and how important a role small business development centers can play.

The following list of facts uses a common definition of a small business: a business establishment with fewer than 100 employees.

* There were 1,052,250 small businesses with employees in California in 2001, the latest year for which data are available. Small businesses represent 98 percent of all California businesses with employees. More than 64 percent had fewer than five employees.

* Over 7.8 million people in California were employed by small businesses with employees. This represents half of all employment in the state.

* Not all small businesses have employees. Businesses with an owner and no paid employees are sometimes referred to as non-employer businesses, and often are part-time ventures with individual owners operating more than one. The Census Bureau counted over 2.1 million non-employer businesses in California in 2000, the latest year for which data is available. When compared to the nation, California non-employer businesses are particularly dominant in the industries of information technology, scientific and technical services, and arts and entertainment services.

* California small businesses continue to gain the interest of venture capitalists, even during the recession. As of the third quarter of 2002, venture capital activity had fallen 85 percent from peak levels reached in the first and second quarters of 2000, both for the US and California. Even in these difficult times, California firms still continue to capture over 40 percent of venture capital deals nationwide during the first three quarters of 2002.

This article was contributed by the Glendale-Burbank SBDC office.

RELATED ARTICLE: Business Refinancing a Hot Trend

With interest rates at 40-year lows, much has been carried in the media about mortgage refinancing. Although it has not been as prominent in the news, business refinancing has also become a hot trend. Small and large businesses alike are taking advantage of this opportunity to lower their operating costs by refinancing their current loan arrangements. Whether it is a line of credit, term loan or commercial real estate loan, even a drop of 1% can result in big savings for businesses that refinance.

"Now is a great time to re-evaluate your business needs and take advantage of a historically low rate environment, locking in savings that could truly make a difference in the long term success of your business", says Jim Hackbarth, Senior Vice President of Mission Valley Bank is Sun Valley.

Dealing with a lender that has the expertise to provide innovative financing solutions is important, because sometimes the business owner does not recognize these solutions. For example, businesses often depreciate their assets faster than the value of those assets fall, resulting in "equity" that can be collateral for a refinance arrangement.

Refinancing can also capture some of the equity that has built up in a property or major asset, resulting in lower loan payments and freeing up cash for new opportunities. Another way to improve cash flow is by refinancing assets that have mismatches, for example, where a company has short-term debt on a long-term asset. In cases like this refinancing can offer considerable cash-flow relief by allowing the business to amortize the equipment for its full term.

* Here are some questions you should ask if you are considering refinancing some or all or some of your business debt:

* Did you purchase or refinance your property over two years ago?

* Has the value of your property increased, warranting a lower rate?

* Do you need cash to make improvements or to invest in other assets?

* Does your business have positive cash flow?

If you answered yes to any of these questions, you may find that refinancing now, during the lowest interest rate environment in decades, can be a great opportunity for your business.

This article was contributed by Mission Valley Bank. For more information on business refinancing, call Jim Hackbarth, Chief Credit Officer of Mission Valley Bank at 8 ?8-394-2340.