Love of Country
Entrepreneurs in rural regions may soon have a shot at a funding windfall. The Rural Business Investment Program (RBIP), a joint effort of the Department of Agriculture and the SBA, seeks to make available $60 million for equity investing and $3 million in grant-funded technical assistance for businesses in small, rural communities.
Under the program and the current available funding, the SBA anticipates licensing up to three VC firms as Rural Business Investment Companies (RBICs) this year. Each RBIC selected will then have up to 12 months to secure $10 million in private financing, after which each is eligible to receive a commitment for up to $20 million in leverage through the RBIP. Upon licensing, an RBIC is entitled to a $1 million Operational Assistance Grant, explains the SBA's Dennis Byrne.
"The program was created by the 2002 Farm Bill to help create or expand the type of rural business ventures needed for a strong rural economy and job opportunities," says Byrne. "An RBIC can provide not only the dollars for expansion and additional employees, but also cost-free, hands-on technical assistance as to how that would be best achieved."
Rural entrepreneurs can find contact and geographical focus areas for RBIC companies on the RBIP website, adds Byrne, who urges entrepreneurs to talk to the appropriate RBIC about investment criteria before applying for financing.
A Good Time for an IPO Gold Mine?
Think the IPO market looks too grim to be worth a gamble? Think again. Contrary to popular practice, the best time to buy IPO stocks is when markets are flagging. Because companies have an easier time going public during good times, those that make the move during more turbulent times are more likely to be a solid bet, according to Jay Ritter, a finance professor at the University of Florida in Gainesville.
"When the market is at a peak, IPO volume is high, and investors tend to overvalue--and overpay--for IPOs," explains Ritter. "In bear markets, investors view IPOs as guilty until proven innocent, and the valuation sometimes gets too depressed."
History supports the theory. While just 22 percent of the companies that went public in 1999 and 2000 are trading above their offering prices, a whopping 69 percent of the 221 companies that went public in the less hospitable 2001 to 2003 period are trading above their offering prices. How does today's IPO market rate? " should see about 200 deals, or less than half of the average number during the 1999 and 2000 boom," says Ritter. "So while it's recovering from the depths of the bear market, the IPO market is still pretty tepid--which suggests that now is a good time to buy selected IPOs and hold them for the long run."
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To retain employees,
72%of small businesses expect to increase wages and benefits more aggressively in 2005 compared to 2004.
Jennifer Pellet is a freelance writer in New York City specializing in business and finance.