Issue link: http://www.insightdigital.biz/i/222066
insight on Financing By Mar yB eth Mat zek small business Start-up financing Small businesses can find cash – they just need to know where to look they need to SCORE (small business counseling) or the e-Seed course at Fox Valley Technical College's Venture Center. "They walk you through the whole process of writing a business plan, which makes sure you have a valid idea for a business," Vogelsang says. "It's a huge asset to the community." SBA changes W hen starting a business, the odds are usually stacked against you: Statistics from the Small Business Administration (SBA) show that half of new businesses never make it to their fifth birthday. Add to it the extra hurdle of challenging economic times – the 2008 crash of the financial sector led to tighter lending rules – and it is more difficult for entrepreneurs to get loans and get their new business off the ground. But things are slowly getting better since the SBA made some changes, making borrowing more attractive to lenders and making alternative resources, such as microloans and revolving loan funds. "Getting funds to start a business is still doable," says Kent Nelson, 32 | Insight • D e c e m b e r 2 013 president of Menasha-based Quick Start Inc., which helps small business owners with finalizing their business plans, securing financing, and other financial issues. "You just need to make sure all your ducks are in a row and you're prepared." Being prepared means that having a solid business plan in place, including one with income projections, is essential in securing funding, says Tim Vogelsang, vice president of commercial banking for First National Bank Fox Valley. "Some people have a great idea and skip the step of putting together a business plan. They just have an idea and think that's what they need," he says. "An idea won't get you funding. You need a solid plan." He usually steers entrepreneursto-be who don't understand what After the 2008 crash, the SBA increased its efforts to help small businesses get funding. The SBA doesn't use its own cash, rather it partners with lenders to work with small businesses. One of the agency's most popular programs – the 7(a) loan program – actually guarantees up to 85 percent of a loan so lenders have that extra assurance they aren't taking on too big of a risk by backing a small business. If the business defaults on its loan, the SBA uses its own funds to repay the lender. Just this fall, the SBA sweetened the pot even more by dropping fees paid by financial institutions for loans less than $150,000, Nelson says. "The SBA keeps taking steps to make it more attractive to lenders to make loans. With the guarantee of getting back up to 85 percent of money loaned, plus not having to pay any fees for making a loan less than $150,000, why shouldn't a financial institution offer its support?" he says. "Banks have cash they want to lend." Nelson admits some smaller community banks with cash to lend don't have the manpower to keep w w w. i n s i g h t o n b u s i n e s s . c o m