SMALL BUSINESS FINANCING
Find Financing
As you go through the VetBiz.gov site, make a list of questions. Then, call us at (866) 584-2344 or send an email to mailto:VACVE@va.gov and we can talk about your specific situation. We will try to answer your questions, and we will direct you to other people who are likely to be of help to you.
VA does not make loans or grants for the startup or expansion of a small business. The Small Business Administration (SBA) is the agency that has been tasked with small businesses financing, for which they have several loan programs established.
Loans
All small business loans are determined on a basis of credit-worthiness.
Lenders commonly require the borrower's personal guarantee
The SBA operates all the federal small business loan programs
Patriot Express Loan
The Small Business Development Centers (SBDCs) provide start up assistance and refer business owners to SBA-approved lenders
Venture capital funds
State microloan programs
Friends, family, collateralized loans, credit cards
- Do I have to factor all my invoices?
- Does the factor actually buy my accounts receivable?
- How does the factor collect?
- What are the requirements for buying an invoice?
- Can I qualify even if we are just starting in business?
- How does the factoring company make money?
Other sites you might find useful
- Business Funding Capital Search Tool
This web site provides business loan and capitol sources.
- The Catalog of Federal Domestic Assistance
This online Catalog of Federal Domestic Assistance gives you access to a database of all Federal programs available to State and local governments (including the District of Columbia); federally recognized Indian tribal governments; territories (and possessions) of the United States; domestic public, quasi-public, and private profit and nonprofit organizations and institutions; specialized groups; and individuals.
- SBA Online Library Reading Room,
This site has the following directories:
- Marketing & Outreach
- Laws and Regulations
- Publications
- SOPs
- Glossary
- Statistics & Research
- Success Stories
- One Stop Capital Shops (OSCSs)
- Reports
- Audio/Video
- Monthly Web Chat
- Forms
Grants are a form of funding for specific federal research and social programs. Contrary to popular belief, there are no federal grants made specifically for the purpose of starting a business.
Organizations can use the Grants.gov website to electronically find and apply for competitive grant opportunities from all Federal grant-making agencies. Grants.gov is THE single access point for over 900 grant programs offered by the 26 Federal grant-making agencies.
- Loans
- All small business loans are determined on a basis of credit-worthiness . Financial institutions take into account several factors including: a business profile, description of how loan funds will be used, collateral offered, business financial statements and personal financial statements. Generally, small business loans are repaid in five to seven years.
- In addition to equity considerations, lenders commonly require the borrower's personal guarantees in case of default. This ensures that the borrower has a sufficient personal interest at stake to give paramount attention to the business. For most borrowers this is a burden, but also a necessity.
- The SBA operates all the federal small business loan programs . There are several SBA small business loan programs established, which are described on the SBA financing website at http://www.sba.gov/financing/index.html .
- On June 14th, 2007, SBA launched a loan program for Veterans called Patriot Express. Patriot Express is part of the SBA 7(a) small business loan program. More information can be found at http://www.sba.gov/patriotexpress /.
- The Small Business Development Centers(SBDCs) provide start up assistance and refer business owners to SBA-approved lenders. A list of SBDCs in each state can be found via the SBDC webpage at http://www.asbdc-us.org/ .
- In some cases, venture capital fundsor other private investors may invest in a startup company. All investment and lending decisions are made by the financial institutions.
- Some states have microloan programsthat will help in the development of a new business venture. To find out if your state has a program you can contact the Small Business Development Centers (SBDCs) in your state. They are usually affiliated with a local university or college. The development centers can help you establish a business plan and will be aware of the state programs. Many states also offer small business financing. There is a limited amount of grant money available for small business in very specialized fields. Although the money ultimately comes from the Federal government, it is administered through the states’ office of economic development.
You can check with your local SBDC to see what is available in your state or go to state programs and click on your state to see a sample of what is available in your state.
The Department of Veterans Affairs can provide some financial assistance to disabled veterans who are starting a small business through the VocRehab program. If you have a service-connected disability of 10% or more, you can apply for the Vocational Rehabilitation & Employment Program to see if you qualify for assistance though their Self-Employment track. Qualification for this track is based solely on the decision made by your VocRehab counselor. This program is operated by the Veterans Benefits Administration. More information can be found on their website at http://www.vba.va.gov/bln/vre/smbus.htm.
Factoring is a form of funding in which payment is received for specific invoices upon submission to the federal customer. So, it provides more rapid cash flow than waiting 30 – 45 days until the customer pays the invoice.
- Do I have to factor all my invoices?
Absolutely not. You may not want or need to factor all your invoices.
- Does the factor actually buy my accounts receivable?
Yes. The money is not a loan; it is an outright purchase of the invoices at the time of billing. So, it isn't a true credit line.
- How does the factor collect?
The same way you collect. Your client simply changes the address makes payment to the factor.
- What are the requirements for buying an invoice?
The work or service must have been completed, delivered and accepted; and your client must be a creditworthy risk.
- Can I qualify even if we are just starting in business?
Yes you can, if you have creditworthy customers.
- How does the factoring company make money?
The factor typically advances up to 90% of the total invoice value upfront and then releases the remaining 10%, less their fee, once the receivables are fully collected.
