Financing Your Business
PrintBusiness funding links and information.
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Types of Funding
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Small Business Administration Programs
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Small Business Investment Companies (SBIC)
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Micro-Loan Lenders
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Grants
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Family and Friends/Crowdfunding
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Incubators
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Banks
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Venture and Angel Capital
TYPES OF FUNDING
| LENDER | TYPE | DESCRIPTION |
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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. |
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There are no direct federal government grants for starting a new business. Grants are generally given to organizations to stimulate or encourage business enterprises. |
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Borrow money from family and friends. There are organizations that can manage personal loans between relatives and friends. |
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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. |
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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. |
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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. |
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
FAX: (303) 844-6468
2009 Economic Recovery Act Information
Quick reference guide to SBA loan programs
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LOAN |
TYPE |
DESCRIPTION |
CRITERIA |
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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.
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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.
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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.
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Up to $35,000
Up to 6 year maturity
Each lender can have different investment criteria. |
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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 |
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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 |
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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.
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$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 |
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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
E-mail: admin@appianvc.com |
Seed - 10%, Early - 70%, Growth - 20%
$500,000 - $5 million |
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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
E-mail: info@capexsbic.com |
Growth, Later Stage
$2 million – $5 million |
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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
E-mail: rita@rockycapital.com |
Later Stage, MBO, LBO, Acquisition, Growth
$3 million – $7 million |
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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 |
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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
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Early, Growth |
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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
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 |
|---|---|---|---|---|
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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
E-mail: microloans@colorado
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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 |
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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
E-Mail: sblan@auroragov.org
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Later, Growth
$5,000 - $75,000 |
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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
E-mail: accion@accionco.org
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Early, Later, Growth
$200-$150,000 |
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
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
CommonAngels, Lexington, MA
Boston Network of Business & Technology Investors
Boston-based angel investment group that provides funding to early-stage technology-driven companies.
