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Small Business Human Resources Workforce Development Your Questions Answered Success Stories

October 2005 — Vol. 83, No. 8

SMALL BUSINESS

Explore all options
for business funding

‘Free money’ isn’t free, notes SCORE

 

Entrepreneurs sometimes look to the federal government for “free money” to start or expand a small business. The truth is, most government agencies direct their dollars toward specific projects, lenders, nonprofit organizations and educational institutions, according to SCORE, a nonprofit organization that provides volunteer business counselors who advise small businesses.

Here are tips on finding state and local funding options:

  1. Consider city or state assistance programs for qualified small businesses, SCORE advises. Examples include tax abatements, urban renewal set-asides, and workforce training and economic development assistance programs.
  2. Contact the Connecticut Department of Economic and Community Development (www.decd.org or 860-270-8000), the Connecticut Development Authority (www.ctcda.com or 860-258-7800) or Connecticut Innovations
    (www.ctinnovations.com or 860-563-5851) to find out about the state’s business assistance programs.
  3. Take advantage of in-kind credits. Like cash, these can be used as matching funds. In one case, a state program counted a company’s $200,000 local property tax abatement as part of the matching requirement.
  4. Understand the purpose and requirements of the program. It may call for raising matching funds or creating jobs.
  5. Remember that having a good business plan and strong management team will help you make your case.

Don’t overlook other sources of financing that may be suitable to your small-business goals, such as venture capital, equity and institutional investors.

If you decide to explore federal options, the U.S. Small Business Administration (SBA) offers low-interest business loans. The SBA’s guaranteed loan programs have helped millions of small businesses get off the ground, expand, and acquire new facilities and equipment.

SCORE counselors can help you obtain these guaranteed loans and financial assistance by guiding you through the loan application process. For more information on the SBA’s loan programs, visit www.sba.gov/financing.

Other financing options

SCORE suggests checking out these other financing resources:

  • The Catalog of Federal Domestic Assistance is an ideal starting point to find nongrant assistance programs administered by federal agencies for specific types of small businesses. To access the online database, visit www.cfda.gov.
  • Most universities have set up special technical centers to facilitate working with businesses on specific projects. Some federal and state technical development grant programs, such as the Small Business Technology Transfer (STTR) Program, may require that you have an academic partner on your proposal. For more information, visit www.sba.gov/sbir.
  • The U.S. Department of Labor’s Veteran’s Employment and Training Service offers employment services, transition assistance, and contracts and grants specifically for veterans. To learn more, visit www.dol.gov/vets.
  • SCORE’s online Learning Center at www.score.org/learning_center.html offers tips and guides on how to obtain a bank loan. Download business plan and loan application templates from SCORE’s Business Toolbox at www.score.org/business_toolbox.html.
  • Get real-world advice from a SCORE business counselor. Free and confidential advice is available face-to-face at SCORE chapters nationwide and through Ask SCORE online counseling at www.score.org. You can also get information about SCORE by calling 1-800-634-0245.