Financing Your Business

Business funding links and information.

http://www.kickstarter.com/     

 

 

 

 

 

 

TYPES OF FUNDING

 

LENDER TYPE DESCRIPTION

Banks,

Commercial Lenders

Debt – Term Loans, Line of Credit,

Credit Cards

 

Commercial lenders offer term loans to finance working capital, fixed asset purchases, business expansion and/or refinance existing debt.  The lender may require an SBA loan guarantee.

 

Revolving line of credit is obtained from a bank or on a credit card.  Supplies funds to fill temporary cash shortages.  Typically used to finance working capital, eg. accounts receivable, inventory.

 

Collateral required.

 

Generally $5,000 - $100,000.

Grants

 

There are no direct federal government grants for starting a new business.  Grants are generally given to organizations to stimulate or encourage business enterprises.

Family and friends

 

Borrow money from family and friends.  There are organizations that can manage personal loans between relatives and friends.

Incubators

 

Designed to encourage business start-ups.  They provide workshops, multi-tenant office space, shared office services, and improved access to capital.  Each center provides services to a very specific clientele. 

 

The Small Business Administration has numerous programs and services designed to help small businesses succeed.   SCORE is sponsored by the SBA.  The SBA is primarily a guarantor of loans made by private and other institutions. 

Private Investors

Equity, Debt

Private or limited stock offerings can raise equity from outside investors without the cost and regulations associated with public offerings.  The private offering must consist of debt and/or equity.  Public stock offerings give the business access to growth capital and give investors a more liquid asset.  These are expensive, time-consuming, and highly regulated.

 

Venture capital (VC) is provided to early-stage, high-potential, high risk, and growth start-up companies. VC's make money by owning equity in the companies they invest in. 

 

An angel investor or angel is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or an equity investment. 

 

Links for small business lending
 
 
Where and how to find capital for your business.
 
 

Colorado Office of Economic Development

Colorado offers various tax incentives and funding programs, including debt and equity financing, funding provided to banks to encourage lending, cash incentives, grants, and tax credits. All are focused on supporting economic development activities in Colorado.

 
 

                                 

 

                               
 

 

SBA Loan Programs

 
Small Business Administration (SBA) - COLORADO
Colorado District Office
721 19th Street, Suite 426
Denver, CO 80202
 
E-Mail:  jeanette.deherrera@sba.gov
 
Phone:   (303) 844-2607

FAX: (303) 844-6468

2009 Economic Recovery Act Information

Quick reference guide to SBA loan programs

 
 

LOAN

TYPE

DESCRIPTION

CRITERIA

SBA Basic 7(a) Loan Guaranty

Debt – Term Loan

Serves as the SBA’s primary business loan program to help qualified small businesses obtain financing when they might not be eligible for business loans through normal lending channels. 

 

Borrower deals directly with a bank or lender.  The bank deals with the SBA.   Generally requires 20-30% equity investment from borrower.

 

All businesses that are considered for financing under SBA’s 7(a) loan program must:

 

·          meet SBA size standards, i.e. be a small business - one that is independently owned and operated and not dominant in its field of operation

 

·          be for-profit

 

·          not already have the internal resources (business or personal) to provide the financing

 

·          be able to demonstrate repayment

 

·          be engaged in, or propose to do business in, the United States or its possessions

 

·          have reasonable owner equity to invest

 

·          use alternative financial resources first including personal assets

 

 

It should be noted that some businesses are ineligible for financial assistance., eg. nonprofits, gambling, real estate investment firms, lenders.

 

Interest rates may be fixed or variable:  Fixed rate loans interest rates:

 

$25k or less/ 1-7 yr. Maturity: up to Prime + 4.25%

 

$25k or less/ 7+ yr. Maturity: up to Prime + 4.75%

 

$25k - $50k/ 1-7 yr maturity: up to Prime + 3.25%

 

$25k - $50k/ 7+ yr maturity: up to Prime + 3.75%

 

$50k +/ 1-7 yr maturity: up to Prime + 2.25%

 

$50k +/ 7+ yr maturity: up to Prime + 2.75%

 

 

Variable rate loans may be pegged to either the lowest prime rate or the SBA optional peg rate. 

 

Up to $1.5 million guaranteed.

 

 

SBA guaranty:

 

·          $150k or less:  up to 85% of loan

 

·          $150k or more: up to 75% of loan

 

7-25 year maturity.

 

 

 

SBA charges lenders a guaranty fee (2% - 3.75%, depending on loan size) and a servicing fee (.545%) for each loan approved and disbursed.  The lender may charge the upfront guaranty fee to the borrower after the lender has paid the fee to SBA and has made the first disbursement of the loan. The lender's annual service fee to SBA cannot be charged to the borrower.

 

SBA Microloan, a 7(m) Loan Program

 

Debt – Short Term Loan

 

The MicroLoan Program provides very small loans to start-up, newly established, or growing small business concerns. Under this program, SBA makes funds available to nonprofit community based lenders (intermediaries) which, in turn, make loans to eligible borrowers in amounts up to a maximum of $35,000. The average loan size is about $10,500. Applications are submitted to the local intermediary and all credit decisions are made on the local level. 

 

SEE Micro-Loan Lenders

Up to $35,000

 

Up to 6 year maturity

 

Each lender can have different  investment criteria.

SBAExpress Loan

Debt

 

Available through preferred lenders, SBAExpress relies heavily upon the lender’s credit analysis, forms, and procedures..

 

CommunityExpress, a pilot program, provides small business loans including technical and management assistance for loan recipients. This loan program is designed primarily for businesses in pre-designated geographic serving rural or low-moderate income (LMI) areas of the state.

 

Patriot Express targets those in the military community who want to establish or expand small businesses.

SBA Express:  Up to $350,000

 

Up to 50% of loan is guaranteed

 

 

Community Express:  Up to $250,000. 

 

75%-85% of loan is guaranteed.

 

 

 

 

 

Patriot Express:  Up to $500,000

 

75%-85% of loan is guaranteed

SBA Certified Development Company (504) Loan Program (CDC)

 

Debt – Term Loan

Long-term financing tool - proceeds from 504 loans must be used for fixed asset projects, not for working capital or inventory, consolidating or repaying debt, or refinancing. Generally, the project assets being financed are used as collateral. Personal guaranties of the principal owners are also required.  To be eligible, the business must be operated for profit and fall within the size standards set by the SBA.  SE SBA website for approved CDC’s.

Up to $4 million

 

SBA Small Business Investment Company (SBIC) program

Equity

 

SBICs are licensed by the Small Business Administration, are privately organized and privately managed investment firms. They are participants in a vital partnership between government and the private sector economy. With their own capital and with funds borrowed at favorable rates through the Federal Government, SBICs provide venture capital to small independent businesses, both new and already established. 

 

SEE SBIC table for SBA approved SBIC’s.

$500,000 - $5 million.

 

Generally require an equity investment in the company.

 
 
  
 

                                          
 

     

 

 

Small Business Investment Companies (SBIC)

 

SBICs are privately owned and managed investment funds, licensed and regulated by SBA, that use their own capital plus funds borrowed with an SBA guarantee to make equity and debt investments in qualifying small businesses. The SBA does not invest directly into small business through the SBIC Program, but provides funding to qualified investment management firms with expertise in certain sectors or industries.  

 

 

LENDER TYPE DESCRIPTION CONTACT CRITERIA

Appian Ventures SBIC I, L.P.

SBIC Licensee,

Equity

 

Invests in software and technologies that enable Applied Connectivity - the application and management of network connectivity to improve business performance.

Contact: Phillip Dignan

 

1512 Larimer Street, Suite 200

Denver, CO  80202

 

Phone: (303) 830-2450

FAX: (303)  830-2449

 

www.appianvc.com

 

E-mail: admin@appianvc.com

Seed -  10%, Early - 70%, Growth - 20%

 

$500,000 - $5 million

 

CapEx L.P.

SBIC Licensee, Debt, Equity

Provides mezzanine debt and equity capital to companies that are historically profitable, have exceptional growth prospects and can benefit from their involvement.

Contact: Jeffrey Ross, Manager

 

518 Seventeenth Street

17th Floor

Denver, CO  80202

 

Phone:   (303) 869-4700

Fax:         (303) 869-4602

 

http://www.capexsbic.com/

 

E-mail:  info@capexsbic.com

Growth,

Later Stage

 

$2 million –

$5 million

Hanifen Imhoff Mezzanine Fund, L.P.

SBIC Licensee,

Debt, Equity, Preferred Stock,

 

Common Stock

Provider of mezzanine & equity capital to small & middle market companies (revenues of $10 million+, EBIT $2 million+). 

 

Industries: Niche Manufacturing, and Service.

Contact:  Edward C. Brown, Manager

 

1125 17th Street, Suite 2260

Denver, CO  80202

 

Phone:        (303) 297-1701

Fax:              (303) 297-1702

 

http://www.rockymountain

capital.com/

 

E-mail: rita@rockycapital.com

Later  Stage,

MBO,

LBO, Acquisition,

Growth

 

 

 

$3 million –

$7 million

 

Roaring Fork Capital SBIC, L.P.

 

SBIC Licensee, Equity

Focus: orphaned microcaps. Roaring Fork defines orphaned microcaps as public companies with market capitalizations of $140 million or less that have been neglected by the financial community. The Fund typically obtains a material ownership percentage of 5% or more.

Contact: Eugene McColley

 

8400 E Prentice Avenue, Suite 745 Greenwood Village, CO 80111

Phone: (303) 694-1300

Fax: (303) 694-1181

 

(Branch Office)

24 S. Weber, Suite 345

Colorado Springs CO 80903

Phone:  (719) 635-3464

FAX:  (305) 425-2757

 

http://www.roaringforkcapital.com/

 

E-mail: jfandal@roaringforkcapital.com

Later Stage

 

$1.5 million - $2 million

Rockies Venture Club

 

Equity Networking organization that links entrepreneurs, service professionals, and funding sources.

1805 S. Bellaire Street, Suite 480 

Denver, Colorado 80222

 

Phone: (303) 831-4174 

FAX: (303) 758-3885

 

http://www.rockiesventureclub.org

/index.php

Early, Growth

Vista Ventures Advantage, LP

 

SBIC Licensee,

 

Equity

 

Invests in early- and growth-stage IT, communications and media and data services companies that provide unique products and services, and that have the potential to become market leaders. Also invests in enabling technologies that are revolutionizing an array of traditional industries.

Contact: Catharine M. Merigold

 

1011 Walnut Street, Suite 410

Boulder, CO 80302

Phone: (303) 543-5716

Fax: (303) 543-5717

 

(Branch Offices)

 

1011 Walnut Street, 4th Floor

Boulder, CO 80302

Phone:  (303) 543-5716 

FAX:  (303) 543-5717

 

315 West Oak Street, Suite 504

Fort Collins, CO 80521

Phone:  (970) 495-1800 

FAX:  (970) 495-6757

 

http://www.vistavc.com/

 

E-mail:  info@vistavc.com

Early,

Growth

 

$1 million - $5 million

 

 

 

                                          

   

                   

 

 

Micro-Loan Lenders

 

Micro-Lenders provide small business loans to entrepreneurs who are unable to obtain financing through traditional sources.

 

 

LENDER TYPE DESCRIPTION CONTACT CRITERIA

Colorado Enterprise Fund

Micro-Loan Lender, SBA 7(m) Loan Program

 

Non-profit community development financial institution founded in 1976. Help people start or expand their small businesses.  Make loans to businesses that can’t get financing from traditional sources. Serves Denver, Adams, Arapahoe, Boulder, Douglas, Jefferson, Larimer, Weld, Elbert, and El Paso counties.

1888 Sherman St, Ste 530

 

Denver, CO  80203

 

Phone:  (303)860-0242

 

FAX: (303) 860-0409

 

http://www.colorado

enterprisefund.org/

 

 

 

E-mail: microloans@colorado

enterprisefund.org

 

Early,

 

Later,

 

Growth

 

$1,000 to $150,000,

 

Current interest rates range from 10% to 13% per year,

 

Loans may be amortized up to 6 years

Aurora Business Development Center

Mico-lender (non-SBA)

Serves city of Aurora, particularly Original Aurora (zip codes 80010, 80011 and 80045).

 

Also provides SBA Community Express Loans to borrowers from any location through three lenders for lower to moderate income areas and minority-owned businesses.

Contact:  Chuck Hahn

 

9810 E. Colfax Ave., Suite 200 

Aurora, CO 80010-2154

 

Phone:  (303) 326-8690

Fax: (303) 361-2953

 

 

 

 

http://www.aurorabdc.com/

 

 

 

E-Mail: sblan@auroragov.org

 

Later, Growth

 

$5,000 - $75,000

 

Accion

Micro lender(non-SBA)

New Mexico, Arizona, and Colorado 501(c)(3) nonprofit organization that increases access to business credit, makes loans and provides training, which enable emerging entrepreneurs to realize their dreams and be catalysts for positive economic and social change.

Largely privately funded.

P.O. Box 181367

Denver, CO 80218

 

Phone: (303) 904-9362

 

 

 

www.accionco.org

 

E-mail:  accion@accionco.org

 

Early,

Later,

Growth

 

$200-$150,000

 

 

 

 

                                           

                            

 

 

Grants

 
There are usually no direct federal government grants for starting a new business.  Check for private grant programs and city/state programs.

 

 

 

 

 

 

Family and Friends/Crowdfunding

 

Links for organizations that help with direct peer to peer lending:

 

 

                                           

 

 

 

Incubators

Business incubators are programs that support the successful development of entrepreneurial companies.  They provide an array of business support resources and services offered both in the incubator and through its network of contacts.  

 

 

 

 

 

 

 

Banks

 

 

SBA Lenders by Volume

 

There are numerous other commercial lenders.  Small businesses, especially start-ups, may have a better chance obtaining funding through a community bank.  Some community banks in our area:

 

 

 

 

                                    

 

 

 

 

Venture and Angel Capital

 

 
List of venture capital firms
 
Venture capital and angel investor site
 
Links to venture and angel investor sites
 
Network of angel investors and venture capitalists
 
Venture capital and angel investor site
 

CommonAngels, Lexington, MA

Boston Network of Business & Technology Investors

Boston-based angel investment group that provides funding to early-stage technology-driven companies.

 
Colorado Capital Alliance, Inc.
Equity, Debt.  Matches private investors with entrepreneurs who need capital:
PO Box 19169
Boulder, CO  80308-2169
Phone:  (303) 499-9646