From the April 1998 issue of Startups

Not all retired executives are playing the links at Pebble Beach or going after record-setting blue marlin off the coast of Hawaii. Call it the spirit of entrepreneurial altruism, but the Service Corps of Retired Executives (SCORE) is an association of more than 12,400 retired executives who offer free advice on a wide range of money matters for fledgling homebased business owners.

SCORE's Web site (http://www.score.org) offers 24-hour access to information on making your business succeed. New on the site are two "must have" financial management workbooks--How to Secure Financing and How to Choose the Best Bank.

Better yet, discuss your financial concerns with a pro. SCORE's site offers one-on-one e-mail counseling with retired financial experts--bankers, CPAs, CFOs, financial planners, tax attorneys and successful self-made entrepreneurs.

"We're giving [homebased business owners] something tangible with e-mail counseling," says W. Kenneth Yancey, SCORE's executive director. "They can enter a key word and the site selects from our roster of experts."

According to Yancey, many small-business owners simply don't understand the process of locating start-up capital or finding the right loan arrangement. "We believe they need to go in prepared, knowing how much they need to borrow, what questions to expect. We can help them get through that," Yancey says. "And we've also got a lot of financial experts who can help with cash flow management, budgeting, marketing and tax strategies."


Kurt Samson is a freelance business writer in Annapolis, Maryland.

Micro Scope

Small-business owners can receive loans of up to $25,000 under the SBA's microloan program. Loans are available at below-market interest rates through dozens of local lenders, and borrowers have six years to repay.

According to Marquita Russel, senior program administrator with the Illinois Development Finance Authority, an organization that handles microloans in the Chicago area, the program is aimed at businesses that aren't bankable--those with past credit problems or without established credit.

Applicants' business proposals are rated on a point basis, and if they are approved, they receive their loan within one month. "Loans can be used for anything except real estate or down payments, and they can't be used as part of a larger loan package," says Russel. The biggest problem with applications? "Most people don't spend enough time on their business plan," she notes. "Their cash flow estimates don't [match] their projections or their narrative."

When applicants need help with their business plans, Russel refers them to their local Small Business Development Center (SBDC). "I don't know why more homebased businesses don't start with the nearest SBDC," she says. "It's better than hiring an accountant. SBDCs know the numbers and spend a lot of time with applicants, helping them get their ducks in a row when it comes to landing a start-up loan."

A complete listing of microloan lenders and SBDCs is available on the SBA's Web site (http://www.sba.gov).

The Taxman Cometh

With its well-publicized scrutiny of homebased business deductions, the IRS is the last place most business owners would think to turn for tax advice. The truth is, the IRS will pretty much do your taxes for you. What's more, upon request, the IRS representative who helps with your return will often note his or her name and field office somewhere on your form. An IRS signature may not ward off an audit, but every bit of validation helps.

While the IRS does not "sign off" on returns it helps prepare, practices at various district offices vary, says Larry Blevins of the IRS. "Customer service is our top priority," Blevins says, "and we're doing our best to sit down with taxpayers and help them substantiate their returns."

Striking A Match

"An excellent first source for smaller investment dollars." This is how Betty Kadis describes Massachusetts Institute of Technology's (MIT) Technology Capital Network in Cambridge, a matchmaker for small and homebased businesses and investors.

For an annual fee of $300, you can include your company profile in the MIT database and update your file four times each year. Once a match is made, the investor who wants to back your enterprise contacts you directly and you take it from there, negotiating the investment terms and returns.

Most businesses are looking for investments of around $25,000, says Kadis, and often seek capital from several backers. "Though many of the small companies are focused on new technology," Kadis says, "we see a lot of consumer service companies and retail outfits as well." Since 1984, the network has helped small entrepreneurs land more than $35 million in investment capital.

Over The Wires

Hibernia National Bank in New Orleans has become one of the first lenders to offer small-business loans via the Internet, according to John Gelis, the bank's assistant vice president of alternate delivery.

At the forefront of what is likely to become a major lending trend, the bank began offering online loans of up to $50,000 late last summer. Unlike the more traditional loan application process, prospective borrowers are not required to provide hard copies of financial and credit documents. Instead, they send the information electronically. "Confidentiality is always an issue on the Web, but we use a secure server and encrypt the customers' information so that no one else can access it," Gelis says.

One great feature of cyberlending, naturally, is the speed with which applications can be processed. "It only takes a day or so," says Gelis. "All the information we need to qualify an application is keyed in right at the Web site (http://www.hiberniabank.com)."