It's always been tough for small businesses to tap into private-equity money. Many PE funds are looking to buy up big, distressed companies and often bypass small businesses entirely.
Probably the best known type of small-business focused private equity firm is small business investment companies, or SBICs. SBICs are privately owned and managed investment funds licensed by the U.S. Small Business Administration. They're allowed to invest in small businesses using funds borrowed with a SBA guarantee. The SBA's involvement has helped these private-equity funds borrow more easily.
SBICs, however, aren't the whole picture in small-company private equity. And there was no easy way to research all of the PE funds that might be a resource for entrepreneurs -- until now.
The SBICs' 50-year-old organization, National Association of Small Business Investment Companies, or NASBIC, is reorganizing as Small Business Investor Alliance. The group is expanding its mission and membership to include all investment limited partnerships, venture funds and lower-middle-market private equity fund managers. Jumping on board with the new group are 23 founding members including Argosy Capital, Access Funds, Capital for Business, Centerfield Capital, Founders Equity and Wells Fargo Bank.
Related: What Private Equity Can Do for Your Company
SBICs have long been a little-known but valuable source of small-business funding -- they invested $60 billion in more than 100,000 small companies since 1958. This year so far, SBICs have invested $2.57 billion, which supported over 56,000 jobs, the Alliance reports.
Related: The Venture Capital Infusions
But beyond SBICs, tracking down other private-equity firms that would take a look at a smaller business has been a process that required a lot of sleuthing. Hopefully the addition of a broader range of PE firms to the Alliance will make it easier for entrepreneurs to research and find private equity funders that are a fit for their business.
The new Alliance holds conferences and other events for its members -- possibly a good way to connect and meet funders in the future, now that the group's mission is broader. The Alliance is making this move in hopes of expanding funders' interest in making small-business investments to help kick-start our sluggish economy.
Are you interested in finding private equity funding for your business? Leave a comment and tell us about it.
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It depends on the dollar amount of your transaction. Most PE firms will not engage in start-upy businesses. Depending on your current cash flow, some hedge funds will work with you. Your best bet is finance companies (factoring companies). Expensive, but necessary. Good luck
I have a new small business an need help getting started san Francisco got clients need equipment.
Dear Sir, I am having a hard time to find new fund for my business expansion. I have a small used car retail business, lately I have found some international motorcycle buyers wanting to do export business with us. The term is like these: I will collect 30% advance from them, then I will use their deposit along with my reserve to buy according to their order requirements, then the balance will be paid in full in 3 business days upon receiving the copy of the ocean bill of ladding. We have been talking about this coorperation for 2 months, now finally coming to an end. They will buy from me! Now I am really looking for someone's help. How can I get a loan to expand my business growth?
Hello, I am interested in obtaining financing to start a bridal shoppe / formal wear. I would need 100% financing. I would like to know about any grants or non conventional lending. Thank you
Good luck if you are a start up company. Most of the PE firms listed with Small Business Investor Alliance will not touch a start up.
I am very interested in exploring the idea of raising capital for a company I start in July of this year. I am planning on launching my product in February or March of 2012 and will need additional capital in January in order to stay on schedule. I am reluctant to share my product here without having an NDA in place. I can be contact via email at doyle@iwanamaker.com
Good information is posted regarding private equity funding. It would be more helpful for small business people.
This is exactly what I'm working on at the current moment - http://bigrockinvestments.com I own a real estate investment company based in Honolulu. We acquire distressed properties with sizable upfront equity for renovation and resale using private capital. The investor gets a private mortgage recorded by escrow, promissory note of usually 10% or greater FIXED and is listed as loss payee on the insurance policy. All funds are held and directed by escrow (we never hold a cent). With banks paying around 1% and stocks resembling an EKG, our model gives safe, double digit stable returns. Investors have access to our data backing up each property and can have their own appraisals done if desired. However, we need more capital to acquire more properties to renovate and resell. A video on our new website above goes through the entire process. We're also part of the FortuneBuilders group of investors, which was recently ranked #1 in business education by Inc., so we have fantastic mentorship and advisors for a solid, long-term business model. If you're interested in investing with us to safely earn a double-digit ROI, please contact me. Aloha.
I am looking for help finding someone who wants to see a business grow quickly and is interested in being part of a small boutique restaurant(10 restaurants), i am 27 years old with three restaurants at the moment. all are solely owned by me with no debt at all. i want to do this right. the only thing missing for me at the moment is a great partner
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It will be more beneficial for the economy growth , if funders' start to invest in small business. As this way the small business can create more opportunity for success. As now the observation said that small business provide more employment. So this way the employment rate also increase. So lots of benefit to invest in small business firm.
Thank you for this great article. Access to capital is so key in this tough market. http://www.predictiveresults.com
I interested in sourcing Private Investment. I am looking to raise Start Up Capital for my CA based business.
Great read, helpful for business owners. For more info in obtaining financing see this article at http://www.greenuptrends.blogspot.com
Need funding for http://topwebsitedesigning.com/ . You can email me at sgoel127@gmail.com or call me at +91-9582929295.
Very encouraging article. Dahlke Carpentry Co. has been in the construction bussiness for 36 years. We have been very fortunate and moderatly successful. Through one of our realestate affiliations, we have discovered a small nitch in the realestate market for new construction. After much research I am convinced that the need is real and the buyers are ready. My problem is start up capital. We have a unique opportunity to put 30 to 35 people to work immediately and change the perception and economics of the local economy. Eight to ten seperate local small businesses would benefit from this partnership. I can be reached @ www.dahlkecarpentryco@yahoo.com or by phone @ 239-210-1486. Much Thanks Jim Dahlke
It is indeed very hard for a small business to tap in private-equity money. I extremely agree with you regarding this kind of matter. Matching up with big companies when it comes to this is a very tough time for small businesses to handle.
Absolutely interested in sourcing Private Investment. I am looking to raise Start Up Capital for my Toronto, Canada based business and I am also offering an Equity partnership.
Yes - interested! RPCD (RoosterPig Conceptual Design): For-profit startup in Martinsville Indiana Specialty/Focus: developing creative product solutions for existing and emerging opportunities independently, and in collaboration with selected clientele Jef Cockerham - Owner/Inventor
Carol, great article. Yes! Please consider me very "interested in finding private equity funding" for my business: Main Street Startups! We are a for profit business incubator in NEOhio.
Excellent article! Nice to see that this is actually coming around! http://www.seekmomentum.com/
There are so many gems lying around, that it's an utter mistake to ignore the small business sector in terms of private equity funding.