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Get Financing Now!

These Resources can help you find the money you need to start--and grow--your enterprise

Financing options for your Business

If you're not using your own cash, credit or savings, there are generally two ways to finance your business: you can borrow the money or get others to invest in your interprise.

When borrowing money, consider these options from Idea Cafe (

Bank loans. Most financial institutions, such as banks, loan money to stable, profitable companies and individuals to help finance business expansion and operations. A loan is usually made for a specific length of time, often a number of years. Typically, the borrower pays a fixed amount per month, which includes a portion of the principal (or amount borrowed) plus interest. A percentage of the loan is used to cover the expenses and risks the bank takes by making the loan.

Bank line of credit. Credit lines, like bank loans, are usually only available to profitable, established businesses and can be secured or unsecured. A line of credit allows you to draw on funds, as needed, for routine operating expenses, up to the maximum amount of the credit line. Credit lines usually carry interest rates much lower than credit cards, but higher than bank loans. There is often a minimal annual fee.

The Small Business Administration 7(a) Loan 6uarantg. Through this program, the SBA guarantees loans made by commercial banks to small businesses. Banks rely on SBA guarantees when the loan applicant is a slight risk for them under their standard criteria. SBA 7(a) loans can be used for working capital, equipment, real estate, purchase of existing businesses and debt refinancing.

SBA MicroLaon. This program is designed to help new businesses get started. These loans--up to $25,000 for a maximum of six years at an interest rate no higher than the prime rate plus 4%--are handled by community economic development groups selected by the SBA.

SBA's 504 Lean Program. This funding source can only be used to finance the purchase of commercial real estate by businesses that are likely to preserve or increase the number of employees they currently have. Qualified small businesses can borrow 80% to 90% of the purchase price of the real estate, with much of the financing coming in the form of a fixed-rate loan.

In getting others to invest, look for these types of investors:

Angels. Private investors who back your company right from the beginning. The amount of control angels want varies. Some are very hands-on, others are not.

Initial public offerings (IPOS). Selling shares of your company to the public in the form of stock. An initial public offering entails intense scrutiny by official regulators before it can be made and opens your operation up to public scrutiny afterward. Private placements. As a small business owner, you can sell shares in your company (equity) to select individuals.

Small Business Investment Companies (SBICs). Affiliated with the Small Business Administration, SBICs channel private investors' money, sometimes combined with government funding or loan guarantees, to small, fast-growing companies.

Venture capitalists. A venture capitalist or venture-capital company is looking to invest in highly profitable, fast-growing firms that are in the early to mid stages of development.

Funding Sources for Women and Minorities

Here are some organization that have special programs for providing loans or venture capital to women and minority businesses.

Broadcast Capital Inc. 1700 K St. NW, Suite 403 Washington, DC 20006 202-496-9250 e-mail:

This SBIC, licensed with the SBA, targets women- and minority-owned radio and television stations and invests in start-ups and expansions. Average investment: $200,000 to $500,000.

Business Consortium Fund (BDF) 305 Seventh Ave., 20th Fl. New York, NY 10001 212-243-7360

The BCF provides financing for a specific transaction when a minority-owned firm--certified by the National Minority Supplier Development Council--has a contract or purchase order and needs working capital. Maximum investment: loan cannot exceed 75% of total borrowed, or no more than $375,000.

Capital Across America 414 Union St., Suite 2025 Nashville, TN 37219 615-254-1515, ext. 214

Targets profitable women- and minority-owned small companies with a three-year track record that manufacture or distribute products. Also invests in businesses offering services such as human resources, insurance or printing. Average investment: $250,000 to $1.5 million.

Inroads Capital Partners 1603 Orrington Ave., Suite 2050 Evanston, IL 60201 847-864-2000

Targets well-established firms owned or led by women and/or minorities that generate annual revenue of $1 million up to $100 million and need capital to expand rapidly over five years. Average investment: $3 million to $5 million.

Telecommunications Development Fund 2020 K St. NW, Suite 375 Washington, DC 20006 202-299-8840

These fund managers attempt to find small telecommunications businesses owned by women and/or minorities. They invest in young companies that have developed products relevant to the industry. Average investment: $250,000 to $1 million.

TSG Capital Group 177 Broad St., 12th FI. Stamford, CT 06901 203-406-1500

Invests in media and communications, specialty retail, and the consumer goods and services industries. It looks for companies that target black, Hispanic or Asian consumers and are expanding through acquisitions or internal growth. Investment range: $10 million to $100 million.

Viridian Capital 220 Montgomery St., Suite 946 San Francisco, CA 94104 415-391-8950

Targets young, technology-based companies that were founded or cofounded by women, are led by women or sell products and services targeted primarily to women. Invests in companies in the information technology and healthcare industries. Average investment: $500,000 to $2 million.

Wells Fargo Bank National Business Banking Center P.O. Box 340214 Sacramento, CA 95834-0214 800-35-WELLS, ext. 120

Wells Fargo Bank has earmarked, for a 10-year period, $10 billion in revolving and unsecured loans for women entrepreneurs. Loans between $500 and $50,000 are available to qualified candidates who've been in business for at least three years, but these entrepreneurs must show a profit at the time they apply for a loan.

Women's Growth Capital Fund 1054 31st St. NW, Suite 110 Washington, DC 20007 202-342-1431

Targets women-owned businesses that have operated for two or more years and have a product or service already on the market, revenue of about $500,000 and projected annual sales growth of at least 20%. Average investment: $500,000 to $2 million.

Organizations of Interest

The following provide assistance to women and minorities in getting funding as well as managing a small business.

National Minority Supplier Development Council 1040 Ave. of the Americas, 2nd Fl. New York, NY 10018 212-944-2430

This organization represents over 3,500 corporations, including most Fortune 500 firms, who use minority suppliers of products and services.

National Association Of Investment companies 733 15th St. NW, Suite 700 Washington, DC 20005 202-289-4336

A trade association of private investment firms that seek to invest in an ethnically diverse marketplace.

National Association of Women Business Owners 1100 Wayne Ave., Suite 830 Silver Spring, MD 20910 800-55-NAWBO 301-608-2596 (fax)

An organization for women entrepreneurs, with national and international affiliations. Membership benefits include partner/vendor discounts and specials, networking with local and national members, educational opportunities and public policy representation.

Doing It by the Book

Below are four recent books with ideas, information and resources to get you thinking creatively about financing your business.

"Business Angels: Securing Start Up Finance" by Patrick Coveney John Wiley & Sons, $71.95

This book features new findings from an Oxford University study of the informal venture capital market and gives clear and essential advice for entrepreneurs seeking funds from family, friends and private investors-the real "business angels."

"Black Enterprise Guide To Starting Your Own Business" by Wendy Beech John Wiley & Sons, $19.95

A one-stop resource guide for today's entrepreneur, this book gives you what you need to know to launch and maintain a solid business. Beech, former BE small business editor, offers advice from defining your idea and writing a business plan to choosing a good location and financing your business.

"Financing Your Business with Venture Capital: Strategies to Grow Your Enterprise with Outside Investors" by Frederick D. Lipman Prima Publishing, $25 800-632-8676 or distributed by Random House

Written by a highly respected attorney who specializes in growing businesses, this book includes information on venture capital and an appendix with sample contracts.

"Where to Go When the Bank Says No: Alternatives For Financing Your Business" by David R. Evanson Bloomberg Press, $24.95 distributed by W.W. Norton To order, call 800-233-4830

This book outlines the viewpoints of angels, as well as what is required to launch IPOs, alternatives to IPOs and where to find venture capital sources, while preparing borrowers for the reality: contacting sources, selling them on your business, putting a value on your business and writing a plan.

Online Resources

The Website that follow include home pages and links to sites with a wealth of information and ideas on raising capital, launching and managing a small business.

ABN: All Business Network A guide to resources for minority-owned businesses, including government sources, schools and trade organizations, and many regional resources.

American Express Small Business Information homepage/smallbusiness.shtml

Offers information on services available to small business owners, from how to apply for an American Express card targeted to small businesses to accepting American Express cards at your establishment.

Creative Investment Research An investment research and management company with information on minority- and women-owned financial institutions.

The MoneyHuntar Features articles, lists of consultants and a matchmaking service for angels, investors and growth companies.

The Service Corps of Retired Executives (SCORE) Association This nonprofit group provides information on local chapters of this organization of more than 12,000 retired and active business executives who offer advice and counseling to small business owners developing their enterprises.

Small Business Administration The SBA is the federal agency that assists small businesses with advice, financing and other business development aids.

SBA's Office of women's Business Ownership womeninbusiness/

A listing of links to SBA services specifically designed to help women.

Venture Associates

Information on how to create private placements and public offerings as well as finding angels, venture capital, investment bankers and management consultants.

Woman Inc.

A national nonprofit organization designed to improve the business environment for women through access to capital, credit, business discounts and products, and financial services.


BLACK WOMEN ENTREPRENEURS HAVE BEEN ON a roll. Between 1987 and 1996, the number of businesses owned by black women has increased 135%, according to the National Foundation of Women Business Owners (NFWBO). But financing these businesses has been a challenge. According to a 1998 NFWBO study, less than half of women business owners of color currently have bank credit, compared to just over half of Caucasian businesswomen. As a result, most African American women have to be creative in raising money to start or expand their enterprises.

To help, we've put together a resource list that includes organizations, Websites, books and other sources, along with a glossary of financial terms, to guide you to funding sources targeted to women and minorities. There's also a list of sources that can help you develop a solid business plan and financial statement while offering advice on a variety of financing strategies. So, get your capital ideas in gear!
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Title Annotation:find the money you need to start--and grow--your enterprise
Publication:Black Enterprise
Date:Aug 1, 1999
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