No matter how spectacular your business plan is, your start-up efforts can come to an abrupt halt if financial backers don't share your enthusiasm for the venture. To fulfill both the needs of small businesses and the requirements of venture capital companies, Congress created the Small Business Investment Company (SBIC) program in 1958. Licensed and regulated by the SBA, privately owned and operated SBICs use their own capital, along with funds borrowed from the SBA, to provide small businesses with long-term loans and equity investments.
For start-up entrepreneurs, this means plenty of resources, tips and, best of all, opportunities--if you're willing to do some research and preparation. The SBA's Mike Stamler offers the following tips on how to seek SBIC financing:
- Use the SBIC directory, available on the SBA's Web site (http://www.sba.gov/INV) or via mail, to locate existing SBICs by state or nationwide.
- Identify and investigate SBICs that might be interested in financing your company. Consider the types of investments a particular SBIC makes, how much money is available for investment, and how much will be available for future investments.
The most important thing to keep in mind when seeking financing from an SBIC is to be prepared. "[Your] initial presentation will play a major role in your success," says Stamler. "You have to demonstrate to the SBIC investors that an investment in your firm is worthwhile. The best way to do that is to present a detailed and comprehensive business plan."
With the SBIC program making investments of $2.35 billion dollars last fiscal year, we'd say visiting the program's Web site or calling the SBA (800-8-ASK-SBA) for more details is a step in the right direction.