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Venturing into business: full of ideas but short on cash? Here's where to go for funding.

As you journey down the road to entrepreneurship, you will certainly need money along the way. True, most start-up capital comes from a business owner's family and friends. But small business financing is available if you know where to look.

Most minority entrepreneurs have difficult getting bank financing. That's changing, however, thanks to pressure from the Clinton administration, which has led to bank-sponsored, minority-based lending programs nationwide.

Last year, 23 Los Angeles banks pooled together $10 million to fund the Southern California Business Development Corp., a program targeted at underserved minority enterprises. The program provides loans averaging $100,000 to retail, manufacturing and service firm applicants.

Joint ventures between banks and minority business development centers have been expanding in several cities. For instance, in Nashville, Tenn., i4 area banks committed $10 million to the loan packages prepared and put up for consideration by the Nashville Minority Business Development Center. The center helps individuals get loans of at least $25,000. And minority entrepreneurs in Orlando, Fla., can get help preparing and presenting their loan packages from the local minority business development center, which in three years has developed 50 loan packages and gotten 30 approvals, for a total of more than $3 million in loan monies.

Often overwhelmed by the paperwork, many minority business owners have avoided altogether the Small Business Administration's 7(a) General Business Loan Guarantee program. Well, the SBA's year-old LowDoc program has trimmed the fat out of its loan application process. For loans under $50,000, applicants simply need to fill out a one-page document. So far, the program has granted more than $300 million in loans, 20% of which has gone to minorities.

The best sources of venture capital are venture capital firms or small business investment companies (SBICs). In general, venture capitalists make equity investments or loans to small enterprises in return for ownership interest. SBICs borrow money from the SBA to fund such ventures.

Venture capital clubs don't invest in businesses, but they do bring investors together with individuals or other companies interested in investing (see "Matchmaking For Venture Capital," Enterprise, June 1994).

If you think calling will take its toll, try the information superhighway (see "Computer-driven Financing," Enterprise, June 1994). Programs such as CapitalBase from Applied Marketing in Oklahoma City, Okla., and MoneyFind Bookware from the American Financial Directories in Boca Raton, Fla., provide lists of venture capitalists and other financing sources. Additionally, the Capital Network in Austin, Texas (512-794-9398) is a computer service that helps small businesses and investors meet online.

Finding capital for your business doesn't end here. Try the Venture Capital Handbook by David Gladstone (Prentice Hall), which details other venture capital opportunities.
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Author:Padgett, Tania
Publication:Black Enterprise
Date:Apr 1, 1995
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