Getting off the ground

 

Starting and running a small business is not a task for the faint of heart. Goochlanders often claim that they want “Mom and Pop” businesses in the county but making that happen is a challenge, often for lack of funds.

People who operate small businesses are good at what they do, be it caring for children, baking, removing trees, and so forth. Where they get hung up is the nuts and bolts of running a business and finding enough money to get started and generate a profit.

Small businesses are typically funded with every penny that the owner has or can borrow. Often, unexpected expenses swamp a start up leading to closed doors and personal financial difficulties.

On January 29, Karen White of the Virginia Department of Small Business and Supplier Diversity held a workshop on small business lending from the Virginia Small Business Financing Authority.

White explained that, while her agency lends money, it is not a bank, but rather the financing arm for small business and economic development.  It helps to bridge gaps between commercial lenders and private equity for small businesses, defined as having fewer than 250 employees, less than $10 million in annual revenues, and less a gross net worth less than $2 million.   

Programs offered by the VSBFA include an economic development loan fund; childcare financing; loan guarantees; and micro loans.

Eligible uses among the programs include the purchase or expansion of owner-occupied property and leasehold improvements, equipment purchases; working capital; and for childcare programs, playground and infant care equipment, technology, and property modification for child safety.

White described the micro loan program as “out of the box” to help with a onetime need. She used the example of a quilting business needed to buy a specific piece of equipment to fulfill a contract and how acquiring that equipment allowed the business to expand.

Childcare, which White characterized as “way more than babysitting”, and is in short supply, has its own financing program with a zero percent loan interest rate for qualifying entities.

This is not a giveaway, contended White, but a helping hand for small business.

There is a robust application process that requires submission of a detailed business plan. She listed basic information required by all lenders including a certificate in good standing from the state corporation commission; and employer identification number (EIN) from the Internal Revenue Service; most recent business and personal tax returns with all schedules; most recent interim financial statements; list of current debts for the owner; business operating agreements; articles of  incorporation and by-laws.

White said that applicants must know how much they need to borrow to succeed and have a plan to pay it back.

Careful management of financial records is crucial to success. White suggested that business owners obtain professional help to set up their books to document costs, deductible expenses, and revenues. “If you can’t afford to hire a bookkeeper or accountant, go to some place like Reynolds Community College to see if they have accounting student interns who would set up your books in return for experience for their resume,” White suggested.

The VSBFA also has an economic development loan fund.

For more information visit  the VSBF or contact White at karen.white@sbsd.virginia.gov.