It takes money to make money. This is more than a simple cliché, it is a fundamental tenet in the business world. And for budding entrepreneurs in South Florida who are brave and ambitious enough to start a business from scratch, it begs the question – how can I get some? Luckily, there are several ways to secure the money you need to help get your business off the ground. Here’s a look at a few.
Small business loans
In an effort to help Floridians start new businesses, the state Department of Business and Professional Regulation created the Florida Business Information Portal and an accompanying “e-guide.” Collectively, these resources cover everything from creating a business plan, to choosing a location, selecting a business name and business structure. They also include information about license requirements, insurance, permits and business financing.
The 7(a) Loan Program – This is easily the SBA’s most popular loan program because it’s a viable financing mechanism for so many different types of businesses. The only thing the funds can’t be used for is buying assets.
The CDC/504 Loan Program – This program allows recipients to use funding for “major fixed assets” including but not limited to equipment or real estate.
The SBA Microloan Program – This particular program provides small (no more than $50,000) short-term loans to small businesses through specially designated lenders. With relatively few restrictions on how the money can be used, recipients are free to apply it as working capital, or for inventory or supplies, furniture or fixtures, or machinery or equipment.
State micro financing programs
If you’re not interested in a federal loan, Florida also offers micro financing programs. Specifically, the Loan Program and Guarantee Program offered under the Florida Microfinance Act helps entrepreneurs and small businesses gain access to credit. This is how each one works.
Under the Loan Program, the Florida Department of Economic Opportunity (DEO) only awards funds to a maximum of three qualified loan administrators. The loan administrators then provide a 1 to 1 match to make short-term microloans (with amounts topping out at $50,000) to entrepreneurs and small businesses. However, there is a catch. The loan recipients must complete training and take advantage of any technical assistance provided by the Florida Small Business Development Network.
Under the Guarantee Program, Enterprise Florida, Inc., uses state funds to guarantee loans that private lenders make to entrepreneurs and small businesses here. The catch is that these guarantees can only be made for loans between $50,000 and $250,000, and a guarantee cannot be more than half of the total loan amount.
If you’re starting a Fort Lauderdale business focused on the creation, development and/or provision of new technology, you may also qualify for grant funding. In particular, the federal government’s Small Business Technology Transfer and Small Business Innovation Research programs may be worth investigating.
Your new business may also qualify for federal grant funding if you’re planning on hiring people in need of work – and/or a second chance. This is because the U.S. Department of Labor’s Employment and Training Administration offers grants to companies that hire youth with disadvantaged backgrounds, former convicts, migrant workers, and others in need of help with joining the workforce.
There are also grant opportunities for Broward County startups owned by women and minorities. These are offered through various agencies and organizations such as the federal Minority Business Development Agency and the SBA Office of Native American Affairs. The SBA’s Women-Owned Small Business Federal Contract Program allows qualified businesses to vie for government contracts, and there are Women’s Business Centers that also provide financial assistance and guidance.
Some other options
Of course, there is always the do-it-yourself (DIY) approach. This is also known as bootstrapping or self-financing. This may be an option if you have savings tucked away that you’re willing to put at risk, or money that you’ve been saving specifically to start your new business. If you can pull it off, the advantages of this approach are that it’s simple and you get to keep the profits and all of the value in the business. If you can’t swing it, you may want to consider teaming up with someone who’s willing to accept the financial risks and share the rewards.
If you’re thinking of starting a bigger business or company, equity financing in combination with “bootstrapping,” may be your best option. This is when you sell interest in your new venture to an investor. He or she then becomes a partner or partial owner of the business. However, you should be aware that a partner in your corporation or LLC may also require certain management and/or ownership rights over the company. As a result, they’ll be able to weigh in on certain decisions, share in profits, and vote on important business matters.
You should also be aware that there are different types of investors, ranging from family and friends to “professionals,” such as angel investors and venture capitalists. There are also specific laws that you must comply with if you accept equity financing.
At Eskander Loshak LLP, we have a proven track record of helping entrepreneurs make their dreams come true. If you have questions about startup funding or similar matters, contact our experienced business lawyers to schedule a consultation today. You can reach us online or by phone at (954) 334-1122.