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Gaining Access to Capital

images-38According to the Small Business Association, one of the biggest issues facing small businesses is the inability to access sufficient credit and capital.   According to numbers from just a year ago almost 8 million small businesses are strapped for cash and may be unable to hire new employees, take on new clients, or sadly, even keep their doors open. Lack of capital is one of the primary reasons that businesses flounder.   What are the options then for small businesses when it comes to gaining access to capital in today’s economy.  Let’s explore the various channels for achieving access to capital.

  • Small Business Administration -SBA The SBA is a government agency that collaborates with private lenders to create (and guarantee) business loans. “Guarantee,” in this case, means the federal government will back up to 90% of a loan. The Office of Capital Access within the SBA mission is to help make capital available through banks and other lending partners to small businesses. They sponsor loans that offer more favorable terms and interest rates.  They are accessible to more businesses, and are open to fixed assets and operating capital.  They also attempt to streamline lending through an automated process that encourages faster decisions and reduces lender underwriting time.
  • Conventional Loans –In contrast with SBA loans, conventional loans are private and are not guaranteed by the federal government. As such, they normally carry higher rates. Conventional loans examine your businesses credit history, your monthly expenses, and your overall business pattern.  Some conventional loans would include: Commercial Loans, Equipment and Vehicle Loans, Business Line of Credit, or  General Business Loans.
  • Crowd Funding – An alternative access to capital that has really taken off in the past few years.  Crowdfunding is by definition, “the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.”  (Forbes) There are numerous crowdfunding platforms where consumers can safely ask for or donate money such as Kickstarter, Indiegogo, RocketHub, and Onevest.
  • Venture Capital – Venture Capital is money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns. (Investopedia) This type of access is great for start ups and tends to heavily favor the technology industry.

About Mike Sperling

Mike is the Founder and Director of Sperling Interactive. Mike’s keen eye for photography, extensive technology skills and innovative marketing ideas make Mike a leader in the website design and management field. He is proficient in html, css, php, javascript, MySQL and the Adobe Design Suite. Before founding Sperling Interactive, Mike worked his way up from staff photographer at the Eagle Tribune Publishing Company to the lead operator and manager of multiple websites for daily and weekly publications. Known as the “media guru”, Mike gathered years of experience before making the leap to start his own business. He graduated from Rochester Institute of Technology with a BFA in Photojournalism and a minor in Mass Communications. When Mike is not meeting with clients or designing new websites he enjoys spending time with his wife, Jodi, daughter Zoey, and son Camden. Mike enjoys hiking, geocaching, traveling, movies, the Baltimore Orioles & Ravens.